When might we see sub-4% 2-year fixed mortgages? brokers react

While many lenders have now gone sub-4% on selected 5-year mortgage deals, brokers are divided on when 2-year deals may be more widely available at a similar cost.

Rates for 2-year deals are continuing to edge down, and Co-operative Bank launched a 3.85% 2-year fixed rate product transfer earlier this week. However, the timescale for wider availability remains unclear.

Free news agency Newspage asked brokers when they think the market could see wider availability of 2-year fixes starting with a 3%.

Here’s what they had to say.


Gary Bush, financial adviser at MortgageShop.com:

“Looking at the swap rate situation, it seems that 2-year fixes with a three in front of them are still a little way off at the moment.

“We need some further good news coming down the track to nudge them a touch lower in the near term.

“With the next Bank of England monetary meeting not until 1st February, which is likely to be another hold, it could well be mid-February before the 2-year deals drop into this very much-needed territory for UK mortgage account holders.”

Justin Moy, managing director at EHF Mortgages:

“I don’t think any lenders quite have the stomach to go with a sub-4% with a 2-year deal just yet, but we are on the precipice of a new chapter in mortgage pricing if inflationary issues can stay away, and lenders’ appetite continues to erode their margins. Nearly, not quite, but soon.”

Stephen Perkins, managing director at Yellow Brick Mortgages:

“The sub-4% 2-year fixed rate should be imminent.

“Lenders are keen to get 2024 off to a positive start towards their lending targets after a lacklustre 2023 and the markets seem confident in a base rate reduction by mid-year.

“The next inflation data could be the Rosetta Stone to unlocking 2-year fixed deals starting with a 3.”

Simon Bridgland, broker and director at Release Freedom:

“Lenders are showing an appetite to reduce rates, which I have no doubt will see 2-year deals start with a three at some point soon.

“However, I feel this will only be for low loan-to-value borrowers.

“Those at the higher end and in the 80% to 95% loan-to-value spectrum are likely to be nestled in the mid-fours at best for a long time to come.

“I believe that as we near any date for a General Election, which could threaten a conveniently timed base rate drop, products such as discounted tracker rates will start to become more appealing to higher loan-to-value borrowers wanting to taste the sweet nectar of 3% rates.”

Louis Mason, content and communications director at Oportfolio Mortgages:

“I think that we could see sub-4% 2-year fixed-rate mortgages as early as next month.

“With lenders dropping rates left, right and centre, it wouldn’t surprise me at all if they start competing for the best sub-4 % rate very soon.

“Great news for borrowers and great news for the property market.”

Daniel Wyke, managing director at Wyke Financial commented:

“Sub-4% mortgages on a 2-year deal are already here.

“Co-operative Bank this week launched huge reductions across its ranges, most notably a 2-year product switch as low as 3.85%, subject to fees and loan-to-value.

“This is great news for the entire market as I’m sure other more prominent High Street names will follow suit.

“Therefore, I don’t think it will be long before we see sub-4% rates on two years being commonplace.

“The real benefit will be when we see these rates for the first-time buyer market and those with lower deposits, namely the 85% to 90% range.

“It’s certainly exciting times and great for the consumer.”

Ranald Mitchell, director at Charwin Private Clients:

“It’s a matter of time, and probably not much time before we see a sub-4% 2-year fixed rate.

“The way lenders continue to jostle for the headlines, and mortgage business, it could be as soon as the end of the month.

“With product design constantly being tweaked, there could be an offsetting of headline interest to product fees to achieve this in the short term, but watch this space, someone is going to make the move and soon.”

Darryl Dhoffer, mortgage expert at The Mortgage Expert:

“If Chuck Norris was involved with sub-4% 2-year fixed rate mortgage deals, he would have roundhouse-kicked these into play already, along with a few cabinet ministers that have not done enough to curb inflation.

“The reality is, inflation is still the barometer that needs to be pummelled downwards before we can see all deals start with a 3%.”

Imran Hussain, director at Harmony Financial Services:

“It would take a lender will balls of steel to offer a 2-year fixed rate product right now under 4% but with most lenders chopping rates in the 5-year fix range it’s only a matter of time before it happens.

“Whoever goes first will have to be prepared for an avalanche of business and have the ability to process it at speed or else simply lose out to lenders who drop rates after them.”

Imogen Sporle, head of property at Finanze:

“The Magic 8 Ball has spoken, and it says ‘maybe.’

“Lenders are open for business and the first week of the New Year has brought good news for borrowers.

“Whether 2-year deals will hit sub-4% is likely a case of when not ‘if.’

“Either way, the phone is ringing and emails are pinging, so Happy New Year!”

Riz Malik, founder & director at R3 Mortgages:

“There needs to be some serious evidence of inflation continuing its trajectory to 2% before we see rates going much lower than what many lenders will release in the first two weeks of January.

“These rate cuts are great but not guaranteed indefinitely, especially given the current geopolitical backdrop.”

Lewis Shaw, owner and mortgage expert at Shaw Financial Services:

“Not within the first half of this year.

“We’d need to see 2-year gilt yields fall by at least 60 basis points from where they are currently before that happened.

“If I was a betting man, and I am, I’d wager we’ll see 2-year fixed rates starting with a three by September 2024.

“This is assuming that China doesn’t invade Taiwan, there’s no further oil shock and inflation continues on its current trajectory.”

Charles Breen, founder at Montgomery Financial:

“By mid-year we will be seeing rates starting with a three.

“Banks are taking the lead where the impotent Bank of England dare not go.

“Mid-spring we will be seeing all of the big 6 with rates starting sub-4% though this is all dependant on inflation levels continuing on a downward trajectory and the schizophrenic Bank of England.”

Elliott Culley, director at Switch Mortgage Finance:

“Swap rates have risen slightly over the last week, so it was surprising to see Barclays reduce 2-year fixed rates by as much as they did.

“I think sub-4% 2-year fixed deals could still take some time to materialise.

“Further positive news from the economy such as a reduction in inflation will be key to rates falling further.”

Graham Cox, founder at Self Employed Mortgage Hub:

“A sub-4% two-year deal could be very close, perhaps within the next few weeks if market sentiment continues improving.

“The only potential fly in the ointment is if the next CPI inflation figures disappoint.”

Ben Tadd, director at Lucra Mortgages:

“With the rate war intensifying, we will likely see a market-leading 2-year fixed rate coming in below 4% within the next few months, possibly even sooner.

“With lenders competing for market share with big targets to meet in 2024, pricing will remain competitive, and once one lender releases a new 2-year fix starting with a three, others will be forced to quickly follow suit to ensure they stay in the race.”

Richard Thompson, director at Abbeydale Mortgages:

“I believe it may take until mid-year for multiple lenders to provide 2-year fixed rates below the 4% interest rate for buyers or people looking to remortgage.

“A further decline in swap rates is necessary for this to happen. Additionally, it’s worth noting that a significant number of these low-interest rates are currently accessible only to applicants with substantial deposits or equity.”

Peter Stokes, director of Mortgages at Davidson Deem:

“I think sub-4% 2-year fixes might be a little way off yet.

“Lenders will want to see the effect of recent rate cuts, and yesterday saw a small spike upwards in swap rates, which may curtail significant rate cuts from those already at the top of the pile.

“I would not rule it out in the near future, but I would expect it to be a matter of weeks and months rather than days.”

Mike Staton, director at Staton Mortgages:

“I expect the Bank of England to reduce the base rate in May and this would be a great time to place a bet on the lenders following suit and reducing 2-year fixed rates.

“I also expect to see further reductions on 2-year fixed rates given that the lenders are making the 5-year fixed rates look more appealing in an attempt to lure clients in on long-term deals this will help them make a killing in the future.

“I now believe that we have seen the mortgage reset button pressed and we are in the process of rebooting the market. I am certain that we will see a stable market as we edge towards 2025.”

Rob Gill, managing director at Altura Mortgage Finance:

“It is only a matter of time until we see a 2-year fixed rate starting with a three.

“Lenders are keen for business and headlines and the first lender to launch such a market-leading rate is guaranteed both.”

Austyn Johnson, founder at Mortgages For Actors:

“When the mortgage world stabilises, it gives lenders a good chance to streamline their services and make rates extra competitive.

“If the 5-year fixed market stabilises and starts working well, lenders will start getting more competitive as the time goes on and slowly, the rates will drop.”

Jamie Alexander, mortgage director at Alexander Southwell Mortgage Services:

For rates to dip below what lenders released in early January, there needs to be clear evidence of inflation maintaining its trajectory toward 2%.

“While recent rate cuts are commendable, they aren’t guaranteed indefinitely, especially given the current geopolitical backdrop.

“Observing the swap rate situation, it seems that 2-year fixes starting with a three are still on the horizon.

“The next Bank of England Monetary Policy Meeting is on February 1 2024, and with the base rate likely to remain unchanged, it might be mid-February before 2-year deals become favourable for UK mortgage holders.”

Ken James, director at Contractor Mortgage Services:

“The competitive nature of the market will force the hand of some of the bigger players to match, if not better, rates that have been published under 4%.

“But will they have the capacity to keep these deals for a long period, especially if swap rates continue to reverse and rise?

“The whole market is crying out for a good boost of business and we are seeing this but at what cost?

“Are these deals loss leaders or are the lenders still making a profit that means the deals can be sustained?

“Too many variables to call it but it’s great to see the rates at the low end of the fours and in some cases below the 4% waterline.”

Ashley Thomas, director at Magni Finance:

“I expect 2-year fixed rates to be below 4% soon.

“Most likely the first quarter but we might see some before the end of January.

“A number of lenders have dramatically reduced their rates in January to date.”