The average rate for a two-year fixed mortgage stands at 3.03% in May. But borrowers opting for a longer fix at five years will pay slightly more at an average of 3.17%

That’s a difference of just 0.14% – the lowest level since February 2013 when it stood at 0.08%, according to Moneyfacts data.

Meanwhile, the average 10-year fixed mortgage stood at 3.21% in May, which is just 0.04% more than the five-year average and 0.18% higher than the two-year deal.

Based on an average two-year fixed rate at 95% LTV (3.35%), a £200,000 mortgage over a 25-year term (repayment basis), would cost £985.23 a month, Moneyfacts calculations revealed.

But a five-year fix (3.47%) on the same basis would cost £998.03 a month – £12.80 a month more.

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And for the 10-year fix (4.09%), the calculations show a borrower would pay £1,065.64 a month – £80.41 a month more.

Product count doubles

The number of mortgage products in the two-year and five-year categories have also doubled, Moneyfacts revealed.

In May 2020, there were 781 products across all LTVs in the two-year fixed mortgage category, but in May 2022, this stands at 1,482.

On five-year fixed deals, across all LTVs, there were 783 products in May 2020, compared to 1,580 now.

However, the number of 10-year fixed mortgages across all LTVs has actually fallen slightly. Moneyfacts noted there were 133 products two years ago, while now there are 129.

Should you fix for longer?

Trussle has seen a decline in the number of borrowers seeking two-year mortgage deals, and an uptick in those taking out five-year and 10-year fixes.

Its data showed 49% of homeowners opted for two-year fixes in April 2021, which has dropped to 31% in April 2022.

However, in April 2021, 48% of customers opted for a five-year fix, which increased to 66% last month.

Meanwhile 5% have opted for a 10-year fix, more than double the 2% recorded last year.

Trussle said 10-year mortgage deals are getting cheaper as lenders are likely expecting rates to go down again in the next decade, so they would make money from borrowers stuck within that term at a higher rate.

Twenty7Tec, a financial software company which helps brokers source mortgages for their clients, said the number of searches for mortgages with fixed terms of under two years is just one-fifth of what it was a year ago.

10-year fixed rate searches are up 26.15% in April year-on-year while those searching for mortgages over 10 years are up 72.09% year-on-year.

Nathan Reilly, director at Twenty7Tec, said: “Compared to last year, people are opting for longer and longer fixed terms on their mortgages. On average, people are fixing their mortgages for a year longer than they were in April 2021.

“The market for fixed mortgages for under two years has shrunk to only one-fifth of its size last year. The market has definitely shifted to the safer end – with twice as many people looking for ten-year mortgages in March 2022 as in December 2021.

“Last year, 51% of fixed mortgages were for five years or more. Now it’s over 71%.”

Rachel Springall, finance expert at Moneyfacts, said given today’s Bank of England base rate rise to 1%, borrowers sitting on variable rates may want to lock into a competitive fixed rate mortgage deal to protect themselves from rising interest rates “perhaps sooner rather than later”, particularly as the average two-year fixed rate surpassed 3% this month.

Springall said: “Fixing for longer may be a logical choice for peace of mind with mortgage payments when other household costs are increasing. The differential rate between the average two-year and five-year fixed mortgage rate is much smaller than in previous years.

“However, aspiring homeowners may need to rethink whether they can even afford to step onto the property ladder due to rising costs and soaring house prices.”