Does anyone remember when mortgage rates were almost 17%!

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.

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.

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

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.

An extremely difficult time.

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.

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.

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.

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.

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.

I was having a bit of a clear out and found the property details of our first house brought just before we married it was £14,500
I remember mortgage rates were around 15% my parents advised us to do all our budgeting on my husbands wages only as when children came along mine could not be relied upon.
We had some new stuff as wedding presents and brought a bed out of a catalogue but most was hand me downs or second hand. Childcare was not common then and amongst our friends nobody even thought of renting.
During the next few years many of our friends brought plots of land and built their own houses The plots were far bigger and would now be used for several houses

I do, thought we'd have to sell the house!

Married in 1973, delay in new house build so didnt move in till 1974.Never paid the quoted mortgage as it increased twice before completion.I then became pregnant (unplanned--)We literally lived hand to mouth.Then local councils started messing with çouncil tax/water rates seperating the bills with huge increases.We had no spare money,second hand furniture,no freezer and old banger of a car.Nurserys hadn't arrived then even struggled with cost of playschool session. We knew no one with the luxury of a gym membership, regular hair and nail treatments and very few had 2 cars.Yes different era,less expectations but young and happy with job lot.

We had just bought a new house too - DH insisted on buying one costing £20k rather than the safer £14k. Terrifying.

Pittcity, the same thing happened to us. The final settlement on the policy wasn't enough to cover paying off the mortgage. Fortunately, we became aware of this and had been saving. It was really worrying at the time.

Yes I do. We had an interest only mortgage as it was what we could afford according to the equation used to calculate how much we could borrow. We ended up with an insurance policy worth less than we owed but had made many times more that on the increase in the price of the house.
We were definitely in a better position than those starting out today as 17% of a little is still less than 2% of a lot!

ElderlyPerson lovely to see you posting. I hope you are well.

If I remember correctly house prices rose rapidly when a wife's earnings started to be taken into account for mortgage loans, up until then "the wife" (sic) was deemed to be going to have children, stop working and therefore her earnings could not be relied upon to pay towards the mortgage loan and so could not possibly be considered.

In those days you had to be brave, whatever you bought it cost more the next week because inflation was 25%, those of us that “bit the bullet” never regretted it. Housing cost both rented and owned was much more affordable then, mortgages seems very achievable if both were working.

Yes I remember we bought our modest house for £8,000 in 1981 thankfully the mortgage is all paid up now and it’s worth much much more I think it’s worth over £130000 at present and going up every day. What does that tell you? I used to say to my old friend if he’d stayed married to the one wife he’d have his mortgage all paid up by now. Don’t think he was amused but it was true.???

Yes, interest rates were high, but a house cost about three times a man's (I know, I know, but that was how it was back then) salary, whereas now ordinary three-bedroom houses in the countryside are going for well over £200,000 and ordinary wages are often well under £25,000 a year.

So I wonder who are buying these houses, where do they get the money?

Indeed. Remember it well. We bought our first house, a tiny new build box, and were gazumped £500. We couldn't borrow any more so we sold the car! Interest rates were going up and up. It was terrifying. We had nothing left to cut back on, but somehow we struggled on.

We bought our first home in 1981, had lived in a tied cottage until then. I had just gone back to work part time as both children were then school age.

I worked 12 hours a week, the mortgage took all of my salary, think it was 14-15%. We owed £13,500.

We managed, DH did lots of overtime, but no fancy holidays, eating out, two cars etc which seems the norm for many nowadays.

I remember it well! We had just moved into what we thought was our forever home. We had stretched ourselves to buy it and every month thereafter it seemed a letter came from the building society indicating yet another rise in interest rate. I really don't know how we managed.

It seems incredible now doesn’t it? Our children would be horrified at having to pay 7% let alone 17%

I thought the same as you Juliet27

Our age group paid mortgages at that eye wateringly high level and now we have savings we get virtually nothing!

I also remember how quickly property prices shot up in the late 70s. We bought our first house, a 3 bedroom mid terrace house on a new development and within months the next phase had shot up in price.