Average homeowner's mortgage rate has doubled in five years and sits at 4% for first time since 2009

The mortgage rate paid by the average homeowner has doubled in the past five years, according to Bank of England data. It shows the interest rate on all outstanding mortgage balances - not just new loans - was 4 per cent at the end of August this year. Less than five years ago in December 2021, that rate was just 2 per cent. Most major lenders have increased their mortgage rates in recent weeks on the back of inflation concerns due to the escalation of the war in Iran and fresh increases in energy prices. The average rate on a new two-year loan taken out today is 5.91 per cent according to Moneyfacts. In December 2021, mortgages were on offer with rates as low as 1.1 per cent. Sonia swap rates, which are used by lenders to price fixed-rate mortgages, have risen and this has increased the cost to banks of providing loans. The bank's data shows that average rates on outstanding mortgages have not been as high as 4 per cent at least since it started collecting this specific set of data in 2016. However, a similar data set shows average outstanding mortgage rates last being above 4 per cent in February 2009. Cost crunch: Mortgage rates on outstanding loans have hit a high not seen since at least 2016Julie Palmer, managing partner at financial and real estate advisor BTG, said it was crucial for the government to make interventions to reduce interest rates at the upcoming Budget. 'Reducing the cost of borrowing by getting control of interest rates, addressing the issue of affordability across the board and looking at reforming stamp duty, are all changes being called for in the Budget,' she said.'The Bank's data also showed that the number of mortgages approved for house purchases fell to their lowest level since December 2023. Higher mortgage rates have made people less likely to move house, especially if they want to buy a bigger home and increase their borrowing. Economic uncertainty, the removal of stamp duty incentives and a depressed housing market have also contributed. There were just under 55,000 purchase loans approved in the month of August, the fourth month in a row that the figure remained below 60,000. According to analysis by estate agent Savills, this means that over the four months to August there were 33,086 fewer mortgage approvals than in the same period last year, a fall of 13 per cent. Lucian Cook, head of residential research at Savills said: 'The weakness in these numbers reflects the recent volatility in the mortgage markets, which have made it more expensive for people to take on a bigger mortgage. 'This has been compounded by the lack of housing wealth accumulated by home overs over the past four years, given the pressure on house prices since September 2022. 'Upsizers, in particular, are putting off plans to move, until they have more confidence in their personal finances and their ability service more debt.'The Government is hoping to give the housing market a shot in the arm via its Your First Home scheme, announced at the weekend. First-time buyers could get the keys to their home with just a 2.5 per cent deposit saved, on top of an equity loan worth 20 per cent of their property's value.However, one expert said cheaper mortgage rates would have a more substantial impact. Simon Gammon, managing partner, Knight Frank Finance, said: 'The Government's announcement of a first-time buyer support scheme will provide a boost to sentiment, particularly in more affordable parts of the country, but mortgage rates remain the bigger constraint. 'A meaningful recovery in transaction volumes is likely to require a sustained improvement in borrowing costs.'How to find a new mortgage Mortgage rates have jumped as conflict with Iran has driven up inflation expectations and dashed hopes of interest rate cuts.If you need a mortgage because you are buying a home, or your current fixed rate deal is due to end, you should explore your options as soon as possible. This is Money has a long-standing partnership with fee-free broker L&C, to provide you with expert mortgage advice.Use This is Money and L&Cs best mortgage rates calculator to show deals matching your home value, mortgage size, term and fixed rate needs.Or use L&C’s online Mortgage Finder to search thousands of deals from more than 90 different lenders to discover the best deal for you.Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage