At the start of June, the average three-year fixed mortgage rate fell to 5.04%, compared to 5.12% for two-year and 5.09% for five-year terms.
So, is a three-year deal worth going for? To help you decide, we’ve taken a closer look at how easy it is to find a three-year fixed-rate, who offers them, plus how the rates compare.
How many three-year mortgage deals are there?
Currently, there are 7,063 residential mortgages available, with 90% of them offering a fixed rate.
The majority of these deals guarantee an interest rate for two or five years. We found that just 11% (875) of fixed-rate deals are available with a three-year term.
However, when we checked, eight out of the 15 largest lenders offer these products. So, although three-year deals are rarer than other terms, there is a solid spread of providers to choose from.
| Lender | Does it offer three-year fixed mortgages? |
|---|---|
| Barclays | No |
| Co-operative Bank | Yes |
| Coventry Building Society | Yes |
| Halifax | Yes |
| HSBC | No |
| Leeds Building Society | No |
| Lloyds | No |
| Nationwide Building Society | Yes |
| NatWest | No |
| Royal Bank of Scotland | No |
| Santander | Yes |
| Skipton Building Society | Yes |
| TSB | Yes |
| Virgin Money | No |
| Yorkshire Building Society | Yes |
Best three-year mortgage rates
Here are the top rates on three-year deals for first-time buyers:
| LTV | Lender | Customer score | Initial rate | Fee | Revert rate |
|---|---|---|---|---|---|
| 60% | MPowered Mortgages | n/a | 3.88% | £999 | 6.24% |
| 75% | MPowered Mortgages | n/a | 4.08% | £999 | 6.24% |
| 85% | TSB | 72% | 4.44% | £995 | 6.74% |
| 90% | RECOMMENDED_BADGE(RECOMMENDED PROVIDER);Skipton Building Society | 78% | 4.67% | £1,495 | 5.99% |
| 95% | RECOMMENDED_BADGE(RECOMMENDED PROVIDER);Skipton Building Society | 78% | 4.99% | £995 | 5.99% |
Skipton Building Society stands out for first-time buyers with a smaller deposit. Those with a 10% deposit can achieve a rate of 4.67%, while buyers with a 5% deposit are offered 4.99%.
Here are the top three-year deals for those remortgaging:
| LTV | Lender | Customer score | Initial rate | Fee | Revert rate |
|---|---|---|---|---|---|
| 60% | MPowered Mortgages | n/a | 3.92% | £999 | 6.24% |
| 75% | RECOMMENDED_BADGE(RECOMMENDED PROVIDER);First Direct | 75% | 4.15% | £490 | 6.74% |
| 85% | RECOMMENDED_BADGE(RECOMMENDED PROVIDER);Skipton Building Society | 77% | 4.4% | £1,495 | 5.99% |
| 90% | Bank of Ireland | n/a | 4.76% | £999 | 6.49% |
MPowered Mortgages once again has the cheapest rate with a sub-4% deal, but only for those with at least 40% equity in their home.
Find out more:How do the best rates compare?
Although the average three-year fix (5.04%) is now lower than both the average two-year (5.12%) and five-year (5.09%) rates, three-year mortgages currently have less competitive top deals.
First-time buyers with a 5% deposit can find the lowest rate with a two-year fix, but if you have a 10% deposit, the lowest rate is found with a five-year term.| LTV | Best two-year mortgage | Best three-year mortgage | Best five-year mortgage |
|---|---|---|---|
| 60% | 3.96% - NatWest | 3.88% - MPowered Mortgages | 3.86% - Barclays |
| 75% | 4.02% - Yorkshire Building Society | 4.08% - MPowered Mortgages | 3.98% - Barclays |
| 85% | 4.22% - Yorkshire Building Society | 4.44% - TSB | 4.3% - First Direct |
| 90% | 4.5% - West Brom Building Society | 4.67% - Skipton Building Society | 4.38% - Leek Building Society |
| 95% | 4.84%- Yorkshire Building Society | 4.99% - Skipton Building Society | 4.89% - Skipton Building Society |
Borrowers remortgaging with smaller deposits (and therefore higher LTVs) are likely to find the best rates on five-year fixed deals. Meanwhile, for those with a 60% LTV, the difference between the top two-year and five-year fixed-rate offers is minimal.
| LTV | Best two-year mortgage | Best three-year mortgage | Best five-year mortgage |
|---|---|---|---|
| 60% | 3.84% - Halifax | 3.92% - Mpowered Mortgages | 3.86% - Barclays |
| 75% | 4.05% - Halifax | 4.15% - First Direct | 3.98% - Barclays |
| 85% | 4.37% - Halifax | 4.4% - Skipton Building Society | 4.29% - Virgin Money |
| 90% | 4.69% - West Brom Building Society | 4.76% - Bank of Ireland | 4.38% - Leek Building Society |
What mortgage length is most popular?
Moneyfacts demand data shows that consumers favour shorter mortgage terms, with demand highest for two-year fixed-rate mortgages.
When focusing on demand for those with 90% or 95% LTV demand for two-year fixes increases further.
Three-year fixed-rate mortgages are the third most in demand term length. Demand for this term length peaks for borrowers with 95% LTV.
Are other fixed-term periods available?
Mortgages aren't just offered with two, three and five-year terms; you can also choose to fix your mortgage for a longer period of time.
There are 265 mortgage deals with fixed terms exceeding five years. These are grouped into seven, ten or 15-year mortgages.
Seven-year fix
Seven-year fixed-rate mortgages are currently available from just three lenders.
At present, the deals are offered by Bank of Ireland, Newcastle Building Society, and Vida Home Loans. Bank of Ireland leads the pack with the most competitive rates, 4.7% for borrowers with 85% LTV. This increases to 4.89% for those with 90% LTV.
Virgin Money has previously offered this product in the past, but doesn't currently offer a seven-year fix.
10-year fix
Deals that fix your rate for a decade are available from 10 mortgage providers. Major providers offering these deals include Barclays, Halifax, Lloyds, Santander, Virgin Money and Yorkshire Building Society.
Nationwide offers the market leading rate of 4.39%. However, those with higher LTV ratios will find the cheapest deal, also from Nationwide, is 4.99%.
15-year fix
April Mortgages is currently the only lender offering fixed-rate mortgages with terms of 15 years. While these deals provide certainty and stability over a long period, this comes at a price. Rates for these mortgages range from 5.6% to 6.53%, depending on the LTV ratio.
In terms of fees, April Mortgages sits in the mid-range. Each 15-year deal comes with a £995 completion fee and a £195 booking fee.
Find out more: undefinedsource https://www.which.co.uk/news/article/should-you-get-a-three-year-fixed-rate-mortgage-axeZA0w25NBR