Mortgage question
Should I choose a 2-year fix or 5-year fix in 2026?
With the Bank Rate at 3.75% (held unanimously in March 2026) and 45 of 50 economists expecting a hold, a 2-year fix around 5.15% gives you optionality to refinance in 2028, while a 5-year fix around 5.20% locks in payment certainty. The right answer depends on whether your household budget can handle a potential remortgage rate shock in 2028.
What’s the actual rate gap in April 2026?
The gap is unusually narrow. In April 2026, Moneyfacts puts the average 2-year fix at 5.84% and the 5-year fix at 5.75% — the 5-year is very slightly cheaper on average. At best-buy level, 90% LTV 2-year fixes sit at around 5.15–5.30% and 5-year fixes at around 5.20%. Historically the 5-year fix was 0.2–0.4pp more expensive; in 2026 that premium has compressed because markets have baked in the expectation of broadly flat Bank Rate over the medium term.
| LTV | 2-yr fix (best buys, Apr 2026) | 5-yr fix (best buys, Apr 2026) |
|---|---|---|
| 60% | ~4.40% | ~4.45% |
| 75% | ~4.50% | ~4.55% |
| 85% | ~5.10% | ~5.15% |
| 90% | ~5.15–5.30% | ~5.20% |
| 95% | ~5.47% | ~5.60% |
What does the Bank Rate outlook actually say?
The Bank Rate outlook through April 2026 is “hold, then maybe cut”. The MPC voted unanimously to hold Bank Rate at 3.75% in March 2026, after a 5-4 hold in February. A Reuters poll in April 2026 found 45 of 50 economists expecting a hold at the 30 April decision, with 5 expecting a hike and none currently pencilling in a cut before Q4 2026. CPI inflation sits at 3.0% (February 2026 figure), inside the BoE’s own guidance range of 3.0–3.5% through Q2–Q3.
If the central expectation plays out, a 2-year fix maturing in April 2028 would remortgage into a market where Bank Rate has either stayed at 3.75% or edged down towards 3.25–3.50%. That’s the implied bet on the 2-year.
Break-even arithmetic: when does each win?
A 2-year fix beats a 5-year fix on the 5-year horizon only if you can refinance in 2028 at below roughly 5.20%. Work it through on a £200,000 repayment mortgage, 25-year term:
- 5-year fix at 5.20%: monthly ~£1,193, total 5-yr cost ~£71,580
- 2-year fix at 5.15%, then assume 2028 remortgage at 5.20% for 3 years: monthly ~£1,188 then ~£1,193, total 5-yr cost ~£71,530
- 2-year fix at 5.15%, then 2028 remortgage at 6.00% for 3 years: monthly ~£1,188 then ~£1,282, total 5-yr cost ~£75,036 — roughly £3,450 more than just locking in the 5-year now
Use the mortgage comparison calculator to plug in your own loan size and stress scenarios.
What about early repayment charges?
ERC — early repayment charge — is usually 2% then 1% on a 2-year fix (£6,000 on a £200k balance in year 1) and 5-4-3-2-1% on a 5-year fix (£10,000 on a £200k balance in year 1). That matters if there’s any chance you’ll move or need to repay the mortgage in full before the fix ends. A 5-year fix locks you in longer, so it’s a bigger commitment if your life might change — job relocation, growing family, divorce. See our guide to mortgage ERCs for the detail.
Common misconception: “A 5-year fix means I can’t move house for 5 years”
A 5-year fix doesn’t lock you in the house — you can sell at any time. The practical question is whether your mortgage is portable: most fixed deals let you port the rate to a new property if you stay with the same lender, subject to a fresh affordability check. If you redeem the mortgage instead (sell and don’t port), the ERC applies to the amount repaid early. If in doubt, ask your broker to confirm portability in writing before you sign. Information, not regulated advice.
Sources
Information, not regulated advice. Mortgage Notes is not an FCA-authorised mortgage adviser. For a recommendation on your specific circumstances, speak to an FCA-authorised broker.