Fixed Rate Mortgage
A mortgage where the interest rate stays the same for a set period, giving you predictable monthly payments regardless of changes to the Bank of England base rate.
What is a Fixed Rate Mortgage?
A fixed rate mortgage locks your interest rate for an agreed period, typically two, three, five, or ten years. During this time, your monthly repayments stay exactly the same no matter what happens to the Bank of England base rate or your lender's SVR. Once the fixed period ends, you move onto the lender's standard variable rate unless you arrange a new deal.
Why it matters
Fixed rates are the most popular mortgage type in the UK, chosen by roughly 95% of new borrowers. The primary appeal is certainty -- you know precisely what your mortgage will cost each month, making budgeting straightforward. This is particularly valuable for first-time buyers or anyone on a tight budget where even a small increase in payments could cause financial strain.
Choosing a fix length
The most common fixed periods are two and five years. Two-year fixes typically offer slightly lower rates and give you flexibility to reassess sooner, but you pay arrangement fees more frequently. Five-year fixes provide longer stability and are often preferred when rates are low and expected to rise. Ten-year fixes are available but less common, and they usually carry higher rates reflecting the lender's increased risk.
Practical example
On a £250,000 mortgage at a 4.5% fixed rate over 25 years, your monthly repayment would be approximately £1,390. If the base rate rises by 1% during your fix, your payment stays at £1,390. Equally, if rates fall, you do not benefit from the reduction until your fix ends.
Important caveats
Fixed rate mortgages almost always come with early repayment charges during the fixed period, meaning you will pay a penalty if you want to switch deals, move house without porting, or pay off the mortgage early. Check the overpayment allowance too -- most lenders permit 10% of the balance per year without penalty, but this varies.
Related Terms
Tracker Mortgage
A mortgage with an interest rate that moves directly in line with the Bank of England base rate, rising and falling by the same amount.
Standard Variable Rate (SVR)
Your lender's default mortgage interest rate, which you move onto after your initial fixed, tracker, or discounted deal period ends.
Early Repayment Charge (ERC)
A fee charged by your lender if you repay your mortgage or overpay beyond allowed limits during a fixed or discounted rate period.