The top 21 fixed mortgage deals

How long should you fix your mortgage rate for? Christina Jordan rounds up the best two, three, five and ten-year fixed mortgage deals.

Fixed rates give you the ultimate in mortgage security. Choose a two-year fix and you know exactly what you will pay for two years. Opt for a 10-year fix and the same applies. It doesn't matter if we have a global economic crisis, if interest rates plunge to 0.5% or indeed shoot up to 10%, your pay rate is the rate you initially fixed at. That's why Brits have historically loved them. They give us peace of mind and frankly let us forget about our mortgage for a while.

But the tide is turning. Back in June over three-quarters of borrowers took out a mortgage on a fixed rate basis according to the Council of Mortgage Lenders, but last month this had dropped to just a quarter, according to figures from mortgage broker John Charcol.

This is because variable rates like trackers and discounted rates are currently cheaper than the fixed rates on offer, so are far more appealing for those who want to keep their payments low. Plus the fear of imminent rate rises has subsided, with many economists now predicting rates will stay low well into 2010.

However there is still a significant minority who want to fix their rate -- and there always will be. These borrowers just need to decide whether to fix for the short-term or the long term.

Difference in price

Short-term fixed rates are priced at a much lower level than longer-term fixes. In fact, according to financial information provider Moneyfacts the average two-year fixed rate has fallen to 4.99% -- the first time it has dropped below 5% since June, and significantly below its July peak of 5.21%.

The average three-year fixed rate is substantially higher at 5.58% and has actually increased over the last few months.

And the news is even worse for those looking to fix for five years, as the average rate is 6.15%. Moneyfacts says that margins on five-year fixes have never been wider.

Of course, it's worth pointing out that the averages are just that. The best buys are, of course, significantly cheaper, starting with two-year fixes from 3.69% from Abbey and First Direct, and five-year deals from 4.95% from HSBC. So it's always worth shopping around if you really want to fix your rate.

What else should you consider?

It's not just the cost of a fixed rate you need to think about. Most also come with Early Repayment Charges (ERCs) that tie you into your deal, charging you to pay off your mortgage or remortgage to another deal. And the longer you fix for the longer you are committing for.

Say you fixed for five-years at the average of 6.15% but then you wanted to change your deal a year down the line. ERCs are likely to apply and they can cost thousands of pounds.

So remember you are making a long-term commitment to the mortgage as well as the rate when you take out a long-term fix.

But there are also many positives.

Long-term advantages

If rates do shoot up at the end of 2010 and remain high, those who have locked into a long-term fixed rate now might be extremely relieved that they did.

Plus, if your deal is 'portable', when you move home you can take your mortgage with you.

Another advantage of long-term fixed rates is the fact that you save on remortgage costs. And with remortgage fees around the £1,000 mark (including exit fees, arrangement fees and any legal and valuation fees), you could save thousands by taking out a 10 year fixed rate, for example. And of course, you save on the hassle of remortgaging, too.

The best deals

Below are my pick of the best short- and long-term fixed rates available, for those with large, medium and small deposits. It's worth mentioning one that is really stonking: Chorley & District Building Society has a 2-year fixed rate up to 90% that totally trumps the competition at 4.99%. This is a great rate for borrowers with just a 10% deposit who don't currently have a lot of choice. My guess is that the lender won't have a massive tranche of money to lend at this rate so get in there quickly if you want it.

Short-term fixed rates - 1, 2, and 3 years

*£595 fee for purchase customers only, remortgagors pay £995

Medium and long-term fixed rates - 4 years and above

*first-time buyers only

**purchase only

***rate increases to 5.99% if you do not choose lender's home insurance

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1st Time Buyers

Mortgages suitable for first time buyers with a maximum 15% deposit, sourced based on lowest payrate. Where a provider's logo is displayed products may be applied for directly.

Offset

Mortgages with an offset facility attached, sourced based on lowest payrate. Where a provider's logo is displayed products may be applied for directly.

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 4045 or email mortgages@lovemoney.com for more help.

This article aims to give information, not advice. Always do your own research and/or seek out advice from an FSA-regulated broker (such as one of our brokers here at lovemoney.com), before acting on anything contained in this article. 

Finally, we tend to only give the initial rate of a deal in our articles, but any deal which lasts for a shorter period than your mortgage term will revert to the lender's standard variable rate when the deal ends. Before you take out a deal, you should always try to find out from your lender what its standard variable rate is and how it will be determined in the future. Make sure you take all this information into account when comparing different deals.