Homeowners are increasingly turning to two-year fixed-rate mortgages in a gamble that interest rates will fall in the near future.

New data from online mortgage lender MPowered Mortgages has revealed a surge in popularity for shorter-term fixes. In the first half of 2022, just 21% of movers opted for a two-year fixed rate deal. This year, that figure has almost doubled, with 38% choosing the shorter-term option.

This shift comes as many borrowers seek to avoid locking themselves into expensive long-term deals while hoping that the Bank of England will soon start cutting interest rates.

Responding to this growing trend, MPowered Mortgages has slashed rates across its two-year fixed rate range:

• Buyers can now secure a two-year fixed rate at 60% loan-to-value (LTV) with rates starting from 4.63% (with a £999 arrangement fee).
• Fee-free options are also available from 4.89%.

These deals are available to both first-time buyers and those moving home.

Stuart Cheetham, CEO of MPowered Mortgages, said: “We’re pleased to be reducing our two-year fixed rates further, having already reduced them at the end of June, further supporting people making their first steps on the ladder and those moving into their next home.

“Demand for two-year fixed rates has doubled since the summer of 2022. Growth in demand for two-year fixes is in part due to people becoming more optimistic about the prospect of rates coming down in the future.”

However, Mr Cheetham also urged caution, warning that there are no guarantees about the future direction of mortgage rates.

“History has taught us this. Speaking to a qualified financial advisor or a broker is crucial before making any decisions,” he added.