Two-year fixes dominate 2025’s mortgage market as FTB activity rises – Mojo Mortgages

Mojo Mortgages analysed activity in the mortgage market as part of its ‘wrapped’ report and found that 57% of mortgages completed this year were on a two-year fixed rate. 

Some 36% of borrowers chose a five-year fix and around 7% went for a three-year fix. Less than 1% selected a one-year fixed rate mortgage. 

The vast majority of borrowers preferred a fixed rate deal, accounting for more than 95% of activity, compared to the 4% who chose a tracker deal, despite the base rate falling over the year. 

Average mortgage rates have also fallen, as Mojo Mortgages found that the price of a two-year fix peaked at 4.8% in January but dropped to 4.1% this month, while typical five-year fixed pricing dropped from 4.5% to 4.1%. 

This was based on the pricing of major mortgage lenders – Halifax, HSBC, Lloyds Bank, Nationwide, NatWest and Santander.

John Fraser-Tucker, head of mortgages at Mojo Mortgages, said: “While rates saw a high and low throughout the year, the market ended 2025 with rates softening, providing a significant boost of confidence for buyers entering the new year. The fact that the lowest two-year and five-year fixed rates from our key lenders were both recorded at a competitive 4.1% on 1 December shows just how much things have improved since the highs we saw in January. 

“This softening trend is clearly what borrowers have been waiting for. The vast majority of our customers – over 95% of those completing a mortgage – chose to lock in a fixed rate, highlighting a continued desire for payment stability. However, the data also shows remortgagors are now more prepared to shop around and switch to a new lender, rather than just taking a product transfer. This suggests the small, downward movement in rates has created enough competition among lenders to encourage borrowers to actively hunt for the best available deal, and we fully expect this competitive environment to intensify as we move into 2026.” 

More active first-time buyers 

Mojo Mortgages noted a rise in first-time buyer activity in 2025, up 5.7% compared to 2024. 

The average age of first-time buyers was 32.3 years old, and aspiring homeowners aged between 25 and 34 years old accounted for 50.8% of those looking for a mortgage. 

The age of first-time buyers ranged from 19 to 61, but Mojo Mortgages stated that it had received a case where the second applicant was aged 83. 

The average mortgage term sought by first-time buyers was 30.6 years and they were looking for a loan of £236,125, up from £201,286 last year. The typical initial monthly repayment was £1,210.76. 

On average, first-time buyers had a deposit of £56,827.58. 

Homemovers had a larger typical deposit of £139,453.69, and they were in need of slightly shorter mortgage terms of 27.5 years. 

The average loan amount required rose from £239,461 in 2024 to £285,850 this year, and the average initial repayment was £1,461.20. 

Most borrowers who were remortgaging switched to a new lender, with 55.5% doing so compared to 52% last year. The remainder chose to stay with their existing lender and complete a product transfer. 

Furthermore, 7.5% of customers completing a remortgage borrowed additional money. 

Fraser-Tucker added: “2025 has been defined by two key factors: the unwavering demand for fixed rate stability and the resilience of the first-time buyer. 

“We’ve seen mortgage rates hitting their annual lows right at the end of the year, providing a real boost for buyers moving into 2026. 

“This trend, coupled with the clear shift of remortgagors actively seeking out new lenders for the best deal, suggests that borrowers are savvy and highly rate-sensitive. We anticipate this positive momentum and buyer confidence to continue into the new year, particularly in the North West and Greater London areas.”