Does anyone remember when mortgage rates were almost 17%!

Oh yes I remember it well. We'd recently bought our 3 bed semi and at the time had considered buying a 4 bed detached version, but were concerned about managing our mortgage repayments if the interest rates went up too much.

Thank goodness we went for the cautious option.

Yes, I do, but I could afford to buy a house and pay my mortgage and I had good pay rises. I can’t afford to buy a house now and in the public sector job I took redundancy from in the summer, I hadn’t had a pay rise in ten years and had to take on a second job.

EP Here are the official government statistics on the earnings of people last year www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyear2020

It shows that the median household income. (50% earn more, 50% less is just under £30,000, the average is just under £39,000.

The figure used is 'disposable income', defined as the amount of money that households have available for spending and saving after direct taxes (such as Income Tax, National Insurance and Council Tax) have been accounted for. It includes earnings from employment, private pensions and investments as well as cash benefits provided by the state. So in many cases, gross salries are higher than those given here.

I had decided not to go back to my full time job I was a civil servant at the time my son was twelve months old. I had to repay my maternity pay which left us very short.

I got a job as a cleaner as the mortgage rate literally tripled. It was a extremely difficult time I was working in a horrible job but got through it.

I remember spending quite a lot of the holidays in France that year and when we came back the mortgage rate had shot up to something astronomical almost overnight. How did we all survive I think my husband was at the peak of his earning powers around that time, so that must have cushioned us somewhat.

I also remember further back in the '70s when I first bought a house with my ex, he had just started working for an American bank who loaned their staff 3% mortgages, this was a very advantageous rate at the time, I'm not sure what the going rate was but certainly a lot higher. I remember how envious friends were of that, although Americans expect their pound of flesh and I remember he and colleagues saying they felt psychologically tethered to the bank by borrowing from them.

An extremely difficult time.

I bought my first place in 1974 when prices were rising enormously. We searched for around 18 months for anything we could afford and travelled to places miles away. Two of us working in the City in decent jobs meant building societies offered us around £6 or £7k and everywhere in London was around double that. They would also only offer 80% of the price.
We finally got a "low start" mortgage from the Council fixed at 12% which meant we could borrow more and bought a flat on a busy road with a factory behind. Young people who think we had it easy have no idea.

Indeed yes. We had just bought a property and the mortgage rate doubled. It was hard but we both worked and economised.

When I was single, 25 years old, I bought my first flat, in the South East, London commuter distance, on my own, small deposit and had a mortgage of £22,500. I still managed to pay season ticket into London as well, despite the mortgage rate being 12.25%. This, to me, is the strongest indicator of how the link between average salaries and house prices has now become truly out of line, there is now way that any of my children, all professionals, could buy a property on one salary as I did.

M0nica

EP Here are the official government statistics on the earnings of people last year www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/incomeandwealth/bulletins/householddisposableincomeandinequality/financialyear2020

It shows that the median household income. (50% earn more, 50% less is just under £30,000, the average is just under £39,000.

The figure used is 'disposable income', defined as the amount of money that households have available for spending and saving after direct taxes (such as Income Tax, National Insurance and Council Tax) have been accounted for. It includes earnings from employment, private pensions and investments as well as cash benefits provided by the state. So in many cases, gross salries are higher than those given here.

Thank you.

My daughter and son are buying their first place together. In the southeast a 2 bed flat is costing them 265k. There is no way they could buy separately. Fortunately they get on, don’t have partners and are very good savers. They’ve managed to save 50k as a deposit whilst living at home and paying a low rent. Not an option to all young people.

yup we already had a fixed interest mortgage and were so pleased.

I worked in a building society at the time, so had a small discount on our mortgage - but still struggled. ?

Don’t know how I managed to keep a smile on my face when all the savers came in twice a year to have their massive interest payments added to their savings!

I remember in the mid 70’s paying a deposit and opting for an interest only mortgage. It took us over a year to stop paying interest on the interest.

I remember the mortgage hikes in the 1980s, we moved in 1988 due to my husbands job when I was a stay at home mum with three children under school age. When we bought the house we could afford the mortgage reasonably comfortably but in the few weeks between agreeing to buy and actually making the first payment, the mortgage rate almost doubled!

We relied on food parcels from my parents and clothes for the children were donated by my mother in law who volunteered in a charity shop. It was amazing how I could feed my family on a pack of bacon, an onion, two potatoes and a bit of grated cheese!

I did a weekly paper round with my children in their pushchair and hand addressed envelopes for a double glazing company just to get a few extra pounds. Fortunately we managed to keep the house and eventually things got easier as my husband got a pay rise and the interest rates fell but I’ve never forgotten how tough it was.

I think it affected the way I look money now, I made sure I lived below my means when I went back to work and after my divorce so I could build up some savings as a buffer.

My children managed to buy their first houses in 2019, both paid rent but lived in cheap flats and did without holidays while they saved. Both bought on their own, without partners, and bought low value houses but I’m very proud of their determination to get on the housing ladder. I did offer to help them out with some money for initial expenses but they both refused my help! I know they have well paid jobs but it still needed determination on their part to save enough money for the deposit.

Yes, remember the very high mortgage rates very well ( if only we had savings at that time!)
Bought our first house in 1969, and after that it only went one way...up.
Now we have no mortgage and a bit of savings which haven’t earned anything in interest for donkeys years.

We had a 25year mortgage in the 70s - I think the house was about £9,000. When the interest rates rocketed the building society gave us the option of increasing the time to 40 years so our monthly payment stayed the same. Just as well as we only had DH's wage to live on.

Oh yes I remember our first flat was in London in 1970 and cost £12,000. The repayments were killing as we were both on low salaries at the time.
We did get tax relief on the interest in those days though.

Same as many others, we bought our first house in December 1978 and the interest rate was 9.75%, by the time we moved in February 1979 the rate was 15.5%.
We bought our present house in 1983 on a low cost endowment deal and made which turned out to be a good deal as we paid a premium of £12,500 over twenty years and it paid out about £37,000 and we had paid off our mortgage by then.

I don't understand the point of this thread. Property prices have risen at a faster rate then average incomes since the 1970s. People now pay a higher percentage of their income on housing.

You’re right in one sense growstuff but surely to compare you would need to look at the other differentials as well, eg what percentage of income was spent on food then compared with mow, which then paints a different picture.

From my experience it is not the cost of a mortgage that is prohibitive but the amount of the deposit you need to get on that ladder
The cost of renting is high and often the monthly mortgage payment on your own home would be less or favourably comparable
Our first home cost us in mortgage payments the equivalent of a weeks salary My daughter and son in laws is probably a similar amount or actually a bit less and they having a mind blowing mortgage of around 260k but that is covered by a bit less than a weeks salary
My son rents at the moment at around 750 a month which is probably quite a bit less than one weeks earning for him but as a seperated dad he has two households to support

Yes I do, it was late 80’s early 90’s

growstuff

This wasn’t the 70’s - it was the late 80’s early 90’s. Surprised you can’t remember.

17% interest was in ‘75 but inflation was 25% so even at that rate if you could afford the repayments you could buy. In ‘90 interest peaked a 14%, inflation was lower at 10% which was not encouraging if you were a first time buyer.
Buying your first house when you were young was never easy, it’s probably harder now the demand for houses seems so much higher now.