⚡ Quick Answer
A fixed-rate mortgage locks your interest rate for a set period — typically 2, 3, or 5 years. Monthly payments stay identical throughout the fixed term regardless of Bank of England decisions. When the term ends, the mortgage reverts to the lender’s Standard Variable Rate (SVR, currently 7-9%) unless you remortgage. In mid-2026, the rate gap between 2-year and 5-year fixes is unusually narrow, making the 5-year option relatively attractive for payment certainty. Early exit before the fixed term ends usually triggers an Early Repayment Charge.
Fixed-rate mortgages dominate new mortgage lending in the UK — they account for the large majority of new products taken out in recent years. Their appeal is simple: you know exactly what you’ll pay each month for the duration of the fix, regardless of what happens to Bank of England rates. The questions worth thinking through are which term to fix for, and what to do when the fix ends.
How Fixed-Rate Mortgages Work
When you take out a fixed-rate mortgage, you agree to pay a specified interest rate for the fixed term. During this period, your monthly payment cannot change — rate rises don’t affect you, but neither do rate falls. When the term ends, your mortgage automatically rolls onto the lender’s SVR (currently 7-9% at most lenders) unless you arrange a new deal.
Most fixed-rate mortgages come with Early Repayment Charges (ERCs) — penalties for leaving the deal before the fixed term ends. ERCs are typically 1-5% of the outstanding balance, often reducing year by year within the term.
2-Year vs 5-Year Fixed: The Current Landscape
In mid-2026, the rate gap between 2-year and 5-year fixed deals is unusually narrow:
- Best 2-year fixed rates (75% LTV): approximately 4.4-4.7%
- Best 5-year fixed rates (75% LTV): approximately 4.4-4.7%
This near-parity means you can secure five years of payment certainty for essentially the same rate as a two-year deal — something that doesn’t always occur when the yield curve is steeper.
Case for a 2-year fix
- Rates may fall in 2026-2027 if the Bank of England continues cutting — a 2-year fix lets you remortgage sooner at potentially lower rates
- More appropriate if you might sell or significantly change your mortgage within 3-4 years
- Lower ERC exposure over a shorter commitment period
Case for a 5-year fix
- Five years of payment certainty at no premium over the 2-year rate currently
- Protection if rates rise rather than fall
- Lower administrative burden — remortgage once rather than twice in five years
- Suitable if you plan to stay for 5+ years and value stability
The SVR Trap: What to Do When the Fix Ends
The most expensive passive financial decision a homeowner can make is drifting onto the SVR when their fixed deal expires. At 7-9%, the SVR is typically 2.5-4.5 percentage points above competitive fixed rates. On a £200,000 mortgage, the difference between SVR and a competitive new fix can be £400-£600/month.
Start reviewing new deals 4-6 months before your current fix expires. Most lenders allow you to lock in a new rate 6 months ahead — protecting you if rates rise before your deal ends.
Our full guide on remortgaging: when, why and how to switch covers the process in detail.
Frequently Asked Questions
Can I overpay on a fixed-rate mortgage?
Most fixed-rate mortgages allow overpayments of up to 10% of the outstanding balance per year without triggering an ERC. Overpaying reduces the balance faster, potentially securing a better LTV tier at remortgage and saving interest.
What is a tracker mortgage?
A tracker mortgage follows the Bank of England base rate plus a set margin. Your payment moves up and down with the base rate. Trackers often come with no ERCs. They suit borrowers who want flexibility and are comfortable with payment variability.
For independent mortgage rate comparisons, MoneySavingExpert mortgage best buys is reliable and regularly updated.
