The cheap mortgage deals lenders don’t advertise

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Forget two and five-year fixes – there’s now a cheaper option
Three-year fixed mortgage rates have fallen to new lows, making them cheaper than the typical two and five-year deals that are heavily promoted by lenders.

Research by Moneyfact shows that while the cost of two and three-year fixes is rising, three-year deals have quietly become very competitive.

The average three-year fix now costs 3.79pc, down from 3.83pc in January and 4.06pc a year ago.

In contrast, the average two-year fix has risen from 3.52pc in January to 3.81pc now. This adds an additional £283 a year to a £150,000 mortgage.

Average five-year fixed rates have risen from 3.92pc to 4.21pc – a difference of almost £290 a year on the same £150,000 mortgage.

Attractive deals are available, but borrowers need to look beyond the overtly marketed deals. Three-year fixed rate deals can easily be overlooked as they tend not be the norm or readily marketed, and yet they are as viable a product as any two-year deal.

“There is no obvious reason that springs to mind why the three-year fixed should be lower priced than the two or five-year equivalents. In fact, all logic suggests that two and five-year fixed rates should be cheaper because the turnover of products is greater, the competition is greater and the majority of borrowers looking at fixed rates as an option are fixated on only two and five years.

Most of the high street banks offer three-year deals, but the most competitive loans in this category are currently available from building societies.
There are some very competitive two-year deals on the market, so borrowers should consider which is the best rate available to them

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