Rising mortgage rates are reshaping borrower choices, with many turning to two-year fixes and variable deals in response to recent increases linked to geopolitical tensions in Iran, according to data from Moneyfactscompare.co.uk.
Analysis of mortgage searches over the 30 days to 2 April 2026, compared with the previous month, shows a clear shift in borrower behaviour.
Demand for two-year fixed deals increased by 13%, reflecting a preference for flexibility amid uncertainty, while interest in five-year fixes fell by 9%, with sharper declines among homemovers and remortgage borrowers.
Variable-rate mortgages also saw growth, particularly among homemovers, who drove a 47% increase in searches, although these still represent a smaller share of the market.
The data highlights how rising rates are influencing decisions: two-year fixes rose by 99 basis points and five-year fixes by 81 basis points since early February, compared with just 28 basis points for variable rates. Borrowers are increasingly seeking shorter-term commitments as they navigate a period of elevated interest rates and market uncertainty.
Adam French, Head of Consumer Finance at Moneyfactscompare.co.uk, said: “The speed and scale of rate rises over the past few weeks has quickly shifted borrower behaviour. With five-year fixes jumping by more than 80 basis points, many are pivoting towards two-year deals in the hope that the rate spike being driven by the conflict in Iran proves short-lived. “Demand for five-year fixes is usually strongest among homemovers, who value certainty in their monthly payments, particularly as they have usually taken on a larger debt. Instead, there has been a dramatic swing towards shorter term options. Remortgage borrowers who are already facing significant payment shocks also appear reluctant to lock in at elevated rates for an extended period. “Some borrowers may also be banking on rates falling sooner than the market is currently expecting. There has been a notable, if still relatively small, shift towards variable rate mortgages, especially among homemovers. While these products remain a minority choice, the uptick suggests some borrowers are willing to take on more risk, betting that rates could fall back in the near-term.” Change in average mortgage rates
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