According to Moneyfacts figures, shorter-term fixed rates were favoured by around 70% of first-time buyers, with 21% of this segment looking at five-year fixed rates.
Regarding remortgage customers, 62% were looking for two-year fixed rates and a quarter were looking at five-year fixed rates.
Looking at second-time buyers, only 41% were considering a two-year fixed rate, while 11% were searching for a three-year fixed rate.
The report added that a third of second-time buyers were looking at five-year fixed rates and 12% were looking for 10-year fixed rates, the highest for the product term.
Only 7% overall were looking for 10-year fixed rates, while 53% were looking for two-year fixed rates, 28% were searching for five-year fixed rates and 9% were opting for three-year fixed rates.
Your First Home: confidence to build
Sponsored by Halifax Intermediaries
| Fixed rate mortgage demand by term and borrower type | |||||
| Mortgage rate period | Moneyfacts Average Mortgage Rate (all LTVs) | First-time buyers | Second-time buyers | Remortgages | All |
| Two years | 4.86% | 70% | 41% | 62% | 53% |
| Three years | 4.76% | 5% | 11% | 7% | 9% |
| Five years | 4.91% | 21% | 33% | 25% | 28% |
| 10 years | 5.61% | 2% | 12% | 3% | 7% |
| Other | n/a | 2% | 3% | 3% | 3% |
Adam French, head of news at Moneyfactscompare.co.uk, said: “It’s not surprising that so many borrowers are considering two-year deals, given expectations for rates to continue falling in the short to medium term.
“At the beginning of the year, the average two-year fixed mortgage rate was 5.48%, higher than the typical five-year deal, which was priced at 5.25%. However, two-year deals have since become cheaper, with average rates now at 4.86% and the average five-year deal sat at 4.91%, both dipping below 5% earlier this year for the first time since the mini Budget in September 2022.
“Despite this, second-time buyers appear to be prioritising stability, predictability, and protection from potential rate volatility over cheaper rates. They seem to be more concerned with securing long-term peace of mind, especially if they have higher levels of borrowing and want to shield themselves from unexpected rate hikes.”
