Compare Fixed Rate Mortgages: Bank vs Broker Rates Exposed [2025 Guide]

The average 5-year deal fell below 6%recently, marking a key milestone not seen since July 2023. Mortgage products have reached a 16-year high of 6,629 in June 2024. This gives homebuyers more choices than ever before. These options create great opportunities, but you need to compare fixed rate mortgages carefully before deciding. First-time buyers prefer these mortgage types, especially when you have to know exactly what you'll pay each month. Mortgage borrowing jumped by £13 billion in March 2025, reaching levels not seen since June 2021. More people are now searching for the best fixed rate mortgage UK lenders can provide. The small difference between two-year and five-year fixed rates makes comparing mortgage deals trickier. You could save thousands over your mortgage term by understanding what banks and brokers offer, whether you're buying your first home or looking to remortgage.

Fixed Rate Mortgages Explained: How They Work

Fixed-rate mortgages are easier to understand than you might think. They help you make smart choices by comparing different options. These loans give you stable monthly payments, unlike their variable counterparts.

What is a fixed-rate mortgage?

A fixed-rate mortgage is a home loan that keeps the same interest rate unchanged throughout a predetermined period. Your monthly mortgage payments stay the same whatever the market does. This option gives you predictable housing expenses, which makes budgeting easier.

Your fixed monthly payment includes both principal and interest. The payment amount stays the same, but the way it splits between principal and interest changes as time goes by. The original payments mostly go to interest, but you'll pay more toward the principal balance as you continue.

How long can you fix for?

Lenders of all sizes offer different term options for fixed rate mortgages. You'll find fixed periods of 2, 3, 5, or 10 years. The 30-year fixed-rate mortgage stands out as the most popular choice, with nearly 90% of homeowners choosing it. UK borrowers should note that the fixed-rate period usually means the original term before switching to a variable rate.

Different terms work for different needs:

• 2-year fixes: Give you quick stability and let you switch after a short time

• 5-year fixes: Keep you safe from interest rate changes for a medium time

• 10-year fixes: Give you long-term security against market changes

Shorter terms usually come with lower interest rates but need more frequent remortgaging. Longer fixed periods might cost more but give you more stability.

What happens when the fixed term ends?

Your mortgage moves to the lender's Standard Variable Rate (SVR) after your fixed period ends, unless you do something about it. This change often leads to higher monthly payments. To name just one example, a £150,000 mortgage over 25 years with a 2% fixed rate could go up to £834 monthly (from £636) if the SVR is 4.5%.

Here's how to get ready when your fixed rate ends:

1. Start your planning about six months before your term ends

2. Look at your current mortgage details including end date, interest rate, and SVR

3. Talk to a mortgage adviser about your options

4. Save some extra money for possible payment increases

Most homeowners choose to remortgage or get a new fixed deal with their current lender instead of paying the higher SVR. Your lender will usually contact you before your fixed term ends to show you your options.

These basics help you compare fixed rate mortgages and pick the term that matches your money situation and future plans.

Bank vs Broker: Key Differences in Fixed Rate Offers

The place you look for fixed rate mortgages matters just as much as what you're looking for. Your mortgage source can affect the options you get and the value you receive.

Access to deals: In-house vs whole-of-market

Banks only offer their own product range, while whole-of-market mortgage brokers can access deals from many lenders. This key difference shapes your options:

• Bank advisers can only recommend their specific lender's mortgages, which limits your choices

• Whole-of-market brokers can access deals from a variety of lenders, including high street banks, building societies, and specialist providers

• Some lenders make mortgage products available only through brokers, so direct applicants can't access these deals

Many brokers say they're "whole-of-market," but some work with smaller panels of lenders. You should ask brokers to show their lender list before you start working with them.

Fee structures: Arrangement fees and broker commissions

Banks and brokers structure their costs differently. Banks charge arrangement fees for mortgage products - either flat fees or a percentage of the loan amount. These fees cover the administration costs of processing your mortgage.

Mortgage brokers get commission from lenders, usually 0.35% to 0.4% of the total mortgage amount. Many brokers work without charging fees, making money only through commission. Some brokers might charge you:

• A flat fee (around £500)

• A percentage-based fee (0.35% to 1% of the loan)

• Both upfront fees and commission

Even with broker fees, you might pay less overall because brokers can access better rates across the market.

Advice and support: Self-service vs guided process

Banks offer a simple but limited service. Their mortgage advisers only know about their own products and give basic application support.

Brokers give you a more personal experience. They help with paperwork and talk to everyone involved in your mortgage process. Their expertise becomes really valuable if you have a complex situation like being self-employed or having credit issues.

Brokers also know which lenders match your specific needs. This knowledge can boost your approval chances without unnecessary credit checks that might affect your score.

Cost Breakdown: Comparing Total Repayment Over Time

Image Source: Advisor Channel - Visual Capitalist

"Interest rate trends for 2025 suggest that fixed mortgage rates are likely to remain elevated, hovering between 6-7%." — Liberty Bank, Financial institution providing mortgage services

The total cost over time shows significant differences between bank and broker offerings beyond the simple mortgage structure. A full picture helps you identify the true value of each fixed rate mortgage option.

Original interest rates: Bank vs broker averages

Interest rates alone tell only part of the story. Independent brokers can access exclusive deals that direct bank applicants cannot get. Their broader market access results in more competitive rates for comparable circumstances.

Current data shows brokers can secure rates 0.2%-0.5% lower than bank-direct options. This small difference adds up to substantial savings over time. A £150,000 mortgage with just a 0.3% rate reduction could save thousands during a fixed term.

Brokers gain this advantage by scanning multiple lenders instead of being restricted to a single provider's products. Yes, it is true that some brokers have access to special broker-exclusive deals you cannot find anywhere else.

Upfront fees: Product fees and valuation costs

Fixed rate mortgages come with several upfront expenses:

• Arrangement/product fees: Range from £0 to £3,000, with lower-rate products often carrying higher fees

• Valuation fees: Typically between £250 and £1,500 depending on property value

• Legal costs: Average £800-£1,500 including required searches

• Broker fees: Vary from free to approximately £500 fixed fee or 0.3%-1% of loan amount

Many fee-free brokers earn through lender's commissions (around 0.35% of loan value) rather than charging customers directly. Banks often apply multiple charges—arrangement fees, booking fees, and administration fees that can exceed £2,000.

APRC and long-term cost comparison

Annual Percentage Rate of Charge (APRC) offers a standardized way to compare mortgage deals' true cost. This calculation has:

• The initial fixed interest rate

• The lender's standard variable rate after the fixed period

• All associated fees and charges

Two mortgages with different initial rates (5.5% with £999 fee versus 5.6% with no fee) show how the fee-free option might cost less over the fixed term despite the higher rate.

Note that APRC assumes you'll keep the same mortgage for its full term (typically 25-30 years), which rarely happens. Most homeowners choose to remortgage when their fixed period ends instead of accepting the lender's standard variable rate.

Your comparison of fixed rate mortgages should consider both immediate costs during the fixed period and potential long-term implications if you stay with the same product.

Choosing the Right Term: 2, 5, or 10 Years?

Choosing your mortgage rate's fixed term is a crucial decision when looking at different options. The average five-year fixed rate (5.09%) sits below the average two-year rate (5.14%) at the start of 2025. This breaks the usual pricing patterns we see in the market.

Best 5 year fixed-rate mortgage options in 2025

Several longer-term deals stand out in today's market:

• NatWest has a 3.88% rate (60% LTV) with a £1,495 fee

• HSBC gives you a fee-free deal at 4.09% (60% LTV)

• Nationwide Building Society (Which? Recommended Provider) comes in at 4.18% (75% LTV) without fees

These rates show that five-year fixes can cost less than two-year options. This suggests lenders think rates will drop in the future.

When short-term fixes make sense

You might prefer a short-term fix if you:

• Want to move home in the next 2-3 years

• Need the freedom to remortgage sooner without early repayment charges

• Think interest rates will drop after the fixed period

• Need lower rates right now for affordability (though this benefit isn't as strong anymore)

A two-year fix lets you review your options sooner. You could take advantage of better rates without getting stuck in a long commitment.

Long-term stability vs flexibility

Five to ten-year fixes give you steady monthly payments even during economic changes. In spite of that, this security has its downsides:

• Rate increases won't affect you, but you'll miss out if rates drop

• You'll face charges for leaving the deal early

• Your financial situation might change and affect how well the fixed rate works for you

Your choice should match your personal goals. A five-year fix works well if you want predictable payments and plan to stay put. Shorter terms might suit you better if you need flexibility, even with the extra costs of remortgaging more often.

When and How to Compare Fixed Rate Mortgages UK

"In its 2025 housing forecast, Realtor.com anticipates that mortgage rates will drop to 6.20% by the end of 2025." — Realtor.com, Leading real estate marketplace and housing forecast provider

The right timing can make a big difference when you search for the best mortgage terms. Good planning and proper tools will help you get a better fixed rate deal.

Best time to lock in a rate

Most experts suggest you should start comparing mortgages three to four months before your current deal ends. This gives you enough time to look at your options and helps you avoid paying your lender's expensive standard variable rate.

You can start looking at new lender options up to six months ahead if you plan to remortgage. This gives you a safety net against market changes—you'll have a lower rate locked in if rates go up, and you can usually switch to a better deal before completion if rates drop.

Your existing lender might let you secure new rates three to four months before your current deal ends, with some allowing this up to six months ahead. Remember that trying to catch the absolute lowest rate is hard unless you can predict the future.

Using mortgage calculators and comparison tools

Mortgage calculators are a great way to get help when you compare fixed rate options. These tools help you:

• See monthly repayments at different interest rates

• Look at costs for both fixed terms and full mortgage length

• Include arrangement fees and other charges to see the real cost

Reliable sites like MoneySavingExpert, MoneySuperMarket, and Moneyfacts show you a complete list of available deals. Make sure you put in the right details about your deposit size, loan amount, and how long you want the fixed term to be.

Tips for first-time buyers and remortgagers

First-time buyers should get a Decision in Principle before they start house hunting. This shows what you can borrow without affecting your credit score. Next, look at your deposit options - even a slightly bigger down payment could help you get better rates.

Remortgagers should:

• Check what their current lender offers as a starting point

• Know their current loan-to-value ratio

• Think about using savings to reach a lower LTV band for better rates

A mortgage broker can be really helpful no matter your situation. They can find deals that match what you need and help you avoid unnecessary credit checks.

Comparison Table

Comparison Factor	Banks	Mortgage Brokers
Product Access	Limited to own product range only	Whole-of-market access including exclusive broker-only deals
Interest Rates	Standard rates	Usually 0.2%-0.5% lower than bank-direct options
Fee Structure	Arrangement fees ranging from £0 to £3,000	Commission from lenders (0.35%-0.4% of loan amount)
Additional Fees	Multiple charges including booking and administration fees, can total £2,000+	Range from fee-free to £500 flat fee or 0.35%-1% of loan amount
Advisory Service	Limited to own products, simple application support	Complete support, paperwork help, communication with all parties
Mortgage Options	In-house products only	Access to high street banks, building societies, and specialist providers
Application Support	Simple self-service process	Guided process with expert knowledge for complex cases
Market Coverage	Single lender	Multiple lenders and exclusive broker-only deals

Conclusion

Your specific financial situation, property plans, and priorities will determine whether you should choose bank-direct mortgages or broker-sourced deals. Brokers give you access to more products and they usually offer better rates than bank-direct options. The savings through brokers can range from 0.2%-0.5%](https://www.moneysupermarket.com/mortgages/broker-or-lender/) on interest rates. These savings add up to thousands of pounds over your mortgage term, even after paying broker fees.

Fixed rate mortgages help you plan your monthly budget with confidence. You'll need to think about the length of your fixed term carefully. Two-year fixes give you more flexibility but you'll need to remortgage more often. Five-year terms protect you longer from market changes. The market showed an interesting shift at the start of 2025 - five-year fixes cost less than two-year deals in many cases. This went against typical pricing patterns.

The right timing makes a big difference when you're getting a fixed rate mortgage. Start looking three to six months before your current deal ends. This gives you enough time to explore your options properly. Mortgage calculators and comparison tools are a great way to get the full picture beyond just the interest rate. They help you factor in arrangement fees and other charges that affect your total costs substantially.

First-time buyers should get a Decision in Principle and learn about deposit options. Remortgagers should check what their current lender offers while seeing if extra savings could put them in a better LTV band. The mortgage market has grown to 6,629 products as of June 2024. This growth brings great opportunities but makes finding the best deal more complex.

The best mortgage isn't always the one with the lowest interest rate. Look at the total cost for the time you plan to stay in the property. Think about the service level you need and how the mortgage lines up with your long-term money goals. This all-encompassing approach will give you more than just the cheapest fixed rate mortgage - it will match your personal circumstances perfectly.

FAQs

Q1. What's the difference between getting a mortgage from a bank versus a broker? Banks offer their own mortgage products, while brokers can access deals from multiple lenders. Brokers often have access to more competitive rates and exclusive deals, potentially saving you money over the long term.

Q2. How long can I fix my mortgage rate for? You can typically fix your mortgage rate for 2, 3, 5, or 10 years. The choice depends on your financial situation and future plans. Longer fixed terms offer more stability but may have slightly higher interest rates.

Q3. What happens when my fixed-rate mortgage term ends? When your fixed term ends, your mortgage usually switches to the lender's Standard Variable Rate (SVR), which is often higher. It's advisable to start planning about six months before your term ends to explore remortgaging options.

Q4. Are 5-year fixed mortgages cheaper than 2-year fixes in 2025? Surprisingly, at the start of 2025, many 5-year fixed mortgages are actually cheaper than 2-year fixes. This challenges traditional pricing patterns and may offer better long-term value for some borrowers.

Q5. When is the best time to start comparing fixed-rate mortgages? It's recommended to start comparing fixed-rate mortgages about 3-4 months before your current deal expires. This gives you enough time to research options without risking moving onto your lender's standard variable rate.