Whistleblower alleges mortgage brokers steer borrowers to two-year fixes for higher commissions, data show shift to shorter terms

A whistleblower employed by a major mortgage lender has alleged that some mortgage brokers steer borrowers toward two-year fixed-rate deals to boost commissions, a practice the whistleblower characterizes as misaligned with customers’ best interests. The claims, provided to This is Money on condition of anonymity, come as scrutiny of broker incentives intensifies.

New data from Twenty7tec show a decisive shift in borrower search patterns toward shorter fixes. The share of searches for two-year fixed rates rose from 41% in January to 53% in August. Searches for three- and five-year fixes together remain below 35%, while interest in longer ten-year deals has fallen to about 12% from 23% at the start of the year.

Actual recommendations recorded on mortgage documents known as European Standardised Information Sheets show 2025 tilting toward two-year fixes. About half of all recommendations were for two-year fixes, 50%, compared with 45% for five-year fixes. By contrast, last year saw slightly more five-year fixes than two-year fixes recommended to borrowers.

Asked about the allegations, the whistleblower told This is Money that brokers appear to be flogging two-year fixes to customers at a time when this is just incredibly risky advice. The source added that if mortgage rates go up again, this will mean more than half of all mortgage holders end up getting screwed all over again.

Industry executives and researchers say the two-year fix is temporarily attractive because it's typically cheaper and because many borrowers are coming off five-year deals agreed during the Covid era. Nakita Moss, head of product at Twenty7tec, said: 'We are seeing a planned pivot back to shorter fixes. With rates easing and a huge wave of borrowers coming to the end of their five year Covid-era deals, many are choosing to keep their options open.' Nathan Reilly, the company's commercial director, added: 'Advisers are in a crucial position right now. With so many clients coming off five-year fixes, the conversation isn’t just about finding the lowest rate, it’s about balancing certainty with flexibility.'

Mortgage rates have broadly declined through much of the year but have edged higher recently on inflation data and market nerves. Some analysts say a further rise in rates could make a longer fix more costly over time, while others contend that shorter fixes give households room to adapt. The two-year fix remains cheaper on average than the five-year option, with Moneyfacts listing two-year fixed rates around 4.98%, versus about 5.02% for five years.

Regulators say consumer protections apply. The Financial Conduct Authority told This is Money the mortgage brokers must consider the needs and circumstances of their customers and recommend products which meet these. It cited the FCA's Consumer Duty and a 2023 rule set that requires brokers to offer clear information and products which are right for them and to ensure customers have considered their options. The FCA said it has asked mortgage brokers to do more to tailor recommendations to personal and financial circumstances.

Advocates for the status quo say short fixes are often the prudent choice given rate trends. Aaron Strutt, senior adviser at Trinity Financial, said: 'Most borrowers want the cheapest rates at the moment understandably because many of them have had huge repayment shocks. Two-year fixes are cheaper than five-year deals, which is something we have not been used to for quite some time. There is a genuine belief that rates will be cheaper in a few years.' Nicholas Mendes, a mortgage broker at John Charcol, added that 'two-year fixes are currently priced cheaper than equivalent five-year deals, which makes them attractive for borrowers focused on keeping costs down.'

From the whistleblower’s perspective, the emphasis on shorter-term fixes could expose more homeowners to future rate shocks. 'The UK mortgage market has a fixation with selling short-term fixed rates even when the conditions say otherwise,' the unnamed source told This is Money. 'With over 55% of mortgages on two-year fixes it means that, if we get another Black Swan event or just simply rising rates, over half UK mortgage holders are exposed to rising payments.' The source cautioned that some brokers may push two-year deals to many clients for commission reasons, rather than suitability.

Market watchers caution that the path of rates remains uncertain. Bank of England Governor Andrew Bailey told MPs there is now 'considerably more doubt' about further rate cuts, even as he continued to expect rates to ease eventually. The central bank cut the Bank Rate from 4.25% to 4% last month, and traders do not expect another quarter-point cut until the spring of next year. Meanwhile, mortgage pricing reflects expectations of future moves, with two-year Sonia swaps and five-year swaps trading below the Bank Rate, a sign that today’s fixed-rate pricing already factors in anticipated policy shifts. As the market awaits clarity, lenders have begun nudging rates higher again, with Barclays and Nationwide among the lenders lifting fixed-rate offers recently.

Against that backdrop, borrowers are urged to act thoughtfully. This is Money’s source said that, regardless of incentives, many borrowers should compare options with a broker and consider locking rates in ahead of upcoming payment changes. Remortgaging early or shopping around can help cushion the impact if rates move, and borrowers should ensure any arrangement fees are understood and that adding fees to the loan is weighed against long-term cost.

Authorities are watching the issue of broker incentives closely. The FCA has urged lenders and brokers to focus on customers’ personal circumstances and to ensure that recommendations align with financial goals. Critics say reform may be needed to reduce incentives tied to specific products, such as commissions paid on new mortgages, to curb potential bias in product selection.

Whether the mortgage market will shift back toward longer fixes remains unresolved. For now, borrowers facing the end of a fixed-rate period should review options promptly, compare quotes from multiple lenders, and consult with a qualified broker to assess whether a shorter or longer term best suits their needs and risk tolerance.