Mortgage lenders boosting three-year fix options for home owners
The choice of three-year fixed-rate mortgages has surged - and the average rate on offer has also reached a record low - according to a financial website.
Often, home owners find themselves weighing up whether to take out a two-year fix or going for a five-year fix - which gives borrowers greater certainty over how much their monthly payments but locks them into the deal for much longer.
The growing number of three-year fixed deals could be a compromise solution.
Moneyfacts.co.uk said three-year fixes can offer "the perfect mix of security and a great rate".
It said there are 82 more three-year fixed rate mortgages on the market than there were two years ago, with 524 deals now available.
The average rate on a three-year fix across all the deals available is now 2.9%, compared with a typical rate of 3.97% in April 2014.
Charlotte Nelson, a finance expert at Moneyfacts.co.uk, said: "Increased competition in the mortgage market means that lenders are branching out in order to attract the attention of borrowers.
"This has resulted in a recent boom in three-year fixed rate mortgages, as well as a marked drop in the average three-year rate to the lowest on record.
"Mortgage customers are faced with a conundrum: many want to benefit from the market's record-low rates but are often wary of locking into a deal for five or more years in case their situation changes. A three-year deal, which sits comfortably in the middle of two- and five-year options, could therefore be a good compromise."
Ms Nelson said borrowers with smaller deposits often prefer the security of a longer-term deal.
She continued: "H owever, by opting for longer deals and not re-evaluating their situation regularly they could end up paying a premium instead of benefiting from the equity they build up over time.
"A three-year fixed rate, on the other hand, will allow the borrower to review their situation sooner."