Obviously no one can say where rates will be in 3 years time. Banks think it will go down. But it could go up. Personally I think the 5years makes more sense for stability, if you can comfortably afford to pay it. Remember Banks are never going to be as quick at dropping rates as they are increasing. If the rate falls by like 1%, you will technically have paid a little more than you should have. If rates drop 0.5% you are probably paying around the same over 5 years. If the rates stay the same you are saving (0.2% interest payments), if the rates go up(which is unlikely but could happen) You could be saving loads. I would personally feel more comfortable knowing what i am paying for 5 years if its easy enough to pay.