3-year fixed-rate mortgages

What is a 3-year fixed-rate mortgage?

You’ve probably heard of 2-year and 5-year fixed-rate mortgages. But you might not know that you have another option that sits somewhere in the middle. 

Enter the 3-year fix. As with other fixed-rate mortgages, your interest rate will stay the same for the duration of your deal length. This means your mortgage payments will be consistent, too, so you always know how much money is coming out of your account each month. 

More homeowners are finding this middle-ground option appealing as they navigate the ever-changing mortgage landscape.

8% of our mortgage applicants opted for a 3-year fix in the first quarter of 2025. This is a sharp increase compared to the same period last year, when just 4% of applicants chose a 3-year fixed.

It’s likely that, with ongoing uncertainty in the mortgage market, borrowers crave a certain element of stability - but don’t want to be left paying more than necessary if rates do fall in the near future. 

Why choose a 3-year fixed-rate mortgage?

• The Goldilocks of fixed rates. Want to lock in your rate for the foreseeable but have the option to compare deals in a few years’ time? A three-year fix could be ‘just right’. It balances security with flexibility, blending the main benefits of a two-year and five-year fix.

• Your payments will stay the same for three years. Knowing how much your mortgage payments will be can help with budgeting both monthly and in the long term. 

• If rates rise, you’re protected. You’ll enjoy peace of mind knowing your rates (and monthly payments) won’t budge for the next three years, even if other mortgage rates on the market change. 

• You’ll be able to choose a new deal sooner. You aren’t tied in for as long as a five-year fix, giving you the option to remortgage onto a new (and hopefully cheaper) deal sooner.

Disadvantages of a 3-year fix

• You’ll need to wait if rates drop. If rates fall within your introductory period, you won’t be able to take advantage of those lower rates until your deal ends (unless you pay an early repayment charge to switch, which will probably outweigh the benefits).

• Remortgaging comes around sooner. Remortgaging can be time-consuming and costly if you change to a new lender. With a three-year fix, you’ll need to choose a new deal sooner than you would with a longer-term fixed-rate mortgage. This could be a good opportunity to adapt your mortgage to meet your current needs, though. 

• Early repayment charges if you need to make changes. If you want to move house within three years or change to a mortgage with potentially different terms, you’ll likely incur charges for exiting early. 

Average 3-year fixed mortgage rates 

The interest rate you’ll be offered for a three-year fixed-rate mortgage will be entirely personal to you. It’ll depend on factors including your financial circumstances, credit history, deposit size and how well you match the lender criteria.

However, the table below can give you a rough idea of average mortgage market trends. It shows the average rate for three-year fixed-rate mortgages available from five of the biggest UK lenders (Santander, Nationwide, Natwest, Halifax and HSBC).

*Data accurate as of 29th April 2025 

How expensive are 3-year fixed-rate mortgages?

As you might expect, 3-year fixed mortgage rates tend to sit somewhere between two-year and five-year fixed rates.

Traditionally longer-term fixes have carried higher rates, as you’re paying a premium for the security of locking in your rate for longer. In recent years we’ve seen a reversal of this trend though and 5-year fixed rates have been more competitive. It’s likely that as the mortgage market stabilises and rates fall, we’ll see two-year fixes return to carrying typically lower rates. 

That said, it’s likely that 3-year fixes will always fall somewhere in the middle. That’s because you benefit from locking in your rate for that extra year while also having the option to remortgage to a different rate two years earlier than a five-year fix. 

Will mortgage rates come down in the next three years?

While it’s generally expected that mortgage rates will continue to gradually fall in the future, there’s really no way to predict what will happen in the next few months let alone in three years’ time. 

How quickly rates fall will largely depend on when the Bank of England (BoE) cuts the base rate and by how much. Some economists predict that the base rate will fall to around 4% in 2025, with interest rates potentially reducing at a modest rate. But, as we all know, there are many factors that could impact the BoE’s decision that no one has sight of just yet. 

That’s why a three-year fix can be reassuring. You’ll have an extra year of security to suss out whether rates are likely to rise or fall, giving you time to make a decision on your next mortgage move when your deal comes to an end. 

Interest rates on some fixed mortgage deals have already fallen below 4% so, if you last fixed in late 2022 or 2023, you may find you can remortgage to a cheaper deal now. However, how long you should fix for in 2025 will depend on your appetite for risk and how you typically prefer to manage your money.

How long could I fix for?

The proportion of customers applying for selected products is based on Mojo Mortgages’ internal customer application data.

Rates and details of products available from selected lenders are correct as of 29 April 2025. These are subject to change and may not be available when you are ready to submit an application.