Majority are wary of locking in longer-term deals as interest rate cuts loom
Borrowers are increasingly choosing two-year fixed rate mortgages over longer-term options, as expectations of interest rate cuts and ongoing economic uncertainty influence decisions, according to new research by Family Building Society.
The lender’s latest Business Outlook Survey, conducted over a six-month period, revealed that more than three-quarters of mortgage brokers and financial advisers have seen a rise in applications for two-year fixed products. Over half of those applicants are actively opting for two-year deals rather than locking in for five years.
“With three Bank of England bank rate reductions predicted this year, it is not surprising that borrowers do not want to commit themselves to a longer-term mortgage,” said Alistair Nimmo (pictured), director of marketing at Family Building Society.
“Add in the current economic and worldwide political uncertainty which may cause further downward pressure on bank rate, fixing outgoings for a short period makes sense while waiting for possible cheaper rates in the short term.”
The preference for shorter-term products comes amid broader discussions about mortgage structures. A separate research suggests that while longer mortgage terms can reduce monthly repayments, they typically result in significantly higher overall interest costs. This trade-off is prompting more borrowers to weigh short-term flexibility against long-term financial impact.
The Family Building Society survey also pointed to continued interest among young people in homeownership, with three-quarters of intermediaries noting a persistent appetite among first-time buyers. Two-thirds said they had not observed any decline in demand from this group.
At the same time, support from family members appears to be growing. Nearly two-thirds of respondents reported more enquiries from parents and grandparents seeking to help younger relatives with deposits or other moving expenses.
When asked about housing preferences, nearly half of brokers said smaller houses were the most sought-after type of property, followed by larger family homes. Flats, bungalows and maisonettes were less in demand, with around three-quarters of respondents ranking them as the least popular.
Stamp duty changes introduced last month also emerged as a concern. Over half of advisers said their clients were worried about the additional costs, though nearly two-thirds believe it will have little impact on overall mortgage activity. A similar proportion do not expect significant shifts in house prices over the next six months.
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