Mortgage rates of yesteryear.

When we bought our house in London in 1979 we had a mortgage but the building society insisted that we also had a bank loan. So we paid twice. The amount paid to the building society was kept on deposit so it did earn a bit of interest. The reason for this was that the house was about to be condemned.

We also had comments from various people that we should buy a small, safe house and then move onto something we really wanted. We moved to Suffolk in 1986. During the period from 1979 onwards, we knew the interest rate and, like other people our age had no idea that rates could go so high. Whilst doing up the London house all our spare cash went into it and my DH worked 7 days a week, either on his own business or on the house.

6 months after we moved to Suffolk, my job moved to Milton Keynes so I travelled to MK for one week a month, staying with colleagues. This lasted for about 18 months when one of the tax partners who was retiring decided he wanted to take over the work that I was doing so I lost my major source of income. I did have a few clients by then but not enough.

Around that time my DH's main client had moved to the Cotswolds, keeping his shop in London and he decided that a three way trip to deliver furniture was too expensive. I therefore had to get a job pretty quickly. I got one, which I really didn't want and cried all the way home. My DH was very relieved. Luckily he didn't run out of work and eventually the client came back to him, sending large loads of furniture for restoration once a fortnight.

During the period of little money coming in we went without all the things we were used to and we didn't have expensive tastes. I don't think we were alone in having to do without.

I’m sure our mortgage rate went as high as 15% at one point ( late 80’s ) but we only had a £35k mortgage - the problem today is people have mortgages of 250k & higher, so any increase is going to be hard.

There is often a lot of talk about how rental properties are unaffordable, but it’s important to remember that the landlord often has a mortgage on the property. When mortgage interest rates increase, the landlord is forced to increase the rent, often reluctantly.
The alternative would be that the landlord is forced to sell the property, possibly to an owner-occupier, thereby removing a property from the rental market.

We were in that position back in the eighties. We had bought a flat as an investment for the future so we were paying two mortgages at one time. When interest rates shot up, we were forced to increase the rent. We kept the increase to a minimum as we had good tenants who looked after the property and didn’t cause us any problems.
Thankfully we and the tenants rode the storm.

vegansrock
House price was 3.5 times salary, with very little deposit.

Aveline

'The past is a foreign country' MaizieD?
Just because people have greater expectations now does not make financial prudence a bad thing. Yes our mortgage rate was 15% so we know and well remember how hard it was thus we can know how younger people feel today.
Desperate unemployment back then at a rate unimaginable today. My OH was made redundant several times due to the economic situation. That feeling of the ground shifting below our feet as yet again his job had gone was appalling. So don't tell me to 'stop it'!

This was exactly our experience as well Aveline. That sick feeling in the stomach every time the post plopped onto the doormat.
We'd just moved house and within a year we'd halved our income thanks to yet another unexpected job loss.
I had to claim Family Tax Credit to make ends meet. I budgeted to the penny.
Even now our situation is ok I can't abide wasting money.

At least in yesteryear you would qualify for a mortgage given market price - and you knew of the interest rate when you started the search for your home

Now, many people doesnt even have the power to apply ot even afford a mortgage - both partners in the relationship working

Hithere yes,we knew the interest when we bought the house, but not how much it would increase, same as today. But this pitting of the generations against each other is just deflecting the blame from where it properly belongs, that is, Government mismanagement.

Riverwalk

And how many remember in the 80s that you could buy a family home in a decent part of London for £50,000?

Today's mortgagees have it far harder, IMO.

I’d love to know what part of Lndon that was.

We bought in 1984 for £65,000 (three bed semi, suburbs) and sold in 186 for £135,000!!

No improvements other than new units n the kitchen.

1986

Yes not in London but we trebled the price of our small terrace in the 90s in 2 years.

We managed to put a small deposit on a terribly tired 3 bed semi, in a lovely road. Interest rates rose and rose, it was awful. Every month we robbed peter to pay paul, with credit cards as well, when the children all needed new shoes and bags and coats for school.
What used to really make my blood boil, was the interest rates savers got. My in-laws had quite a few thousand saved, and the interest they earnt on that enabled them to go abroad a couple of times a year. The balance was so unfair, and as we struggled, others creamed off interest to a substantial degree.
I hope that doesn't happen this time around, even though a bit more interest on our savings, quite small I admit, would be very welcome.

Our mortgage was 5% in 1958. I well remember the days of 15-17% mortgages, I believe with little notice to adjustments. Today the rates seem small by comparison, similar to what we paid so long ago.

Maizie ''We knew what the interest rates were going to be when we took those mortgages on;''

sorry but we did NOT! For reasons I stated, we over mortgaged ourselves up to the hilt. and then mortage shot up by about 10%- totally out of the blue. It nearly floored us, and caused huge amount of stress.

I agree, things are different.

But it is not healthy to totally deny that expectations are too. And to deny that we did not go to restaurants, did not buy expensive wine and booze, did not have expensive fashion, or cars, or phones, or furniture or gadgets. No expensive prams and pushchairs. We 'made do' with second hand stuff, 'hand me downs' and banana boxes. We started with virtually NOTHING.
And we certainly did not ever have expensive holidays abroad.

I am not blaming youngsters- but denying this was a FACT for most of us, is not healthy either.

BridgetPark. We saved to buy a house before we returned to this country and I remember having to cash in our Government bond on which we were getting 17% return. That was in 1989.

*Jennifereccles *rents are frozen in Scotland until at least March and evictions are not allowed except in extreme circumstances
As a landlord of a number of rentals for over 25 years I would suggest people dont get involved in letting unless they can survive the ups as well as the downs in mortgage rates .
Its very silly to have any property that isn't bringing enough to cover your costs in the case of a rise in rates and that should be factored in before you buy to let .Its not just your own finances you'rer risking but the people who rent from you are at risk of losing their homes.

The problem is the price of the houses/mortgage compared to wages not the interest rate.

My first house cost under 30k and the mortgage was 6% but I earnt 20k pa

Fleurpepper I agree, things are different.

But it is not healthy to totally deny that expectations are too. And to deny that we did not go to restaurants, did not buy expensive wine and booze, did not have expensive fashion, or cars, or phones, or furniture or gadgets. No expensive prams and pushchairs. We 'made do' with second hand stuff, 'hand me downs' and banana boxes. We started with virtually NOTHING.

Above is exactly what I believe.

Much of the problem, currently, is expectations. Our children suffer from much higher expectations than we had regarding possessions, trips, homes, cars. We won't subsidise that which we find frivolous.

Happily our daughters know what we believe, won't ask.

The amount people pay out on a repayment mortage as a % of total income changes very little, even under the current estimate your cost of living and take from the total, basis.

It means, generally that if interest rates go up house prices come down because the how much someone can repay a month is fixed and if the interst share of it goes up then less is available to repay the capital, so the either prices drop, or you buy a smaller cheaper house or you move to a cheaper area.

I have found a chart showing mortgage rates since 1973 www.purepropertyfinance.co.uk/news/a-brief-history-of-average-mortgage-interest-rates/ It doesn't go back to 1969 wen we bought our first house. Our starting rate of interest was 7.25%, or thereabouts. It shows how incredibly high interest rates were for most of us and how incredible low the interest rates have been for the last 20 years giving those who have bought in that period a false sense of security.

I have commented a number of times that the easiest way to reduce house prices was to increase interest rates. No one took any notice of me, but I was right.

Actually we’re thought the same paddyann54 and we did have a surplus each month from the rental property, but when interest rates started to rise, as others have remembered on here, they just rose and rose, so obviously at some point we had to raise the rent.

I agree with you that it’s always sensible to factor in unforeseen increases but the situation then was exceptional.

It didn’t put us off investing in property though!

Maisie some of what you say is true, but you are generalising just as much as those you are criticising.

We bought our first house in 1979 (with a mortgage based on both our salaries) and prices were rising very rapidly, so waiting even a month could put properties out of our reach. We borrowed the max we could afford and waited a year before getting married to slowly furnish it and buy the things we needed. In that year, the mortgage rates rose so much that our repayments almost doubled, so in the end we moved in and furnished as we went. We waited ten years to have children, and moved to the family house we needed in 1989, and rates jumped then, too. When they hit 15% we had two babies and were still living in a 'do it upper'.

You are right that we weren't brought up with credit - maybe it would have been easer if we had in some ways. But my children weren't either.

I do, however, feel sorry for young people today. The UK, as a place to live, has declined and is continuing to do so. It is still better than most, IMO, but we are not in a period of seeing things get better, and haven't been since my mum's generation. She saw the NHS come in along with free education, MIRAS, cheap housing that could be bought on the one salary that also paid for everything else council housing for all who needed or wanted it, free and readily available dentistry, pensions at 60 whether you'd worked or not, libraries and nightclasses, and much more - all of which have gradually declined or disappeared in my lifetime.

I'm not saying that her life was easier - it wasn't. I am saying that each generation has both benefits and disadvantages that others don't. Judging isn't fair.

M0nica

The amount people pay out on a repayment mortage as a % of total income changes very little, even under the current estimate your cost of living and take from the total, basis.

It means, generally that if interest rates go up house prices come down because the how much someone can repay a month is fixed and if the interst share of it goes up then less is available to repay the capital, so the either prices drop, or you buy a smaller cheaper house or you move to a cheaper area.

I have found a chart showing mortgage rates since 1973 www.purepropertyfinance.co.uk/news/a-brief-history-of-average-mortgage-interest-rates/ It doesn't go back to 1969 wen we bought our first house. Our starting rate of interest was 7.25%, or thereabouts. It shows how incredibly high interest rates were for most of us and how incredible low the interest rates have been for the last 20 years giving those who have bought in that period a false sense of security.

I have commented a number of times that the easiest way to reduce house prices was to increase interest rates. No one took any notice of me, but I was right.

Quite interesting chart.

However, I'd have thought most of us would have bought in the late 50s to early 60s time? Rates actually were fairly low in 1959, on our home, I well remember the high rates of later times.

I think it's best not to compare "us to them" - that way is discontent.

Norah Grans start around 50. Iam 79 and we bought our first house in 1968, I think the majority of members of Gn are younger than that, often much younger. Perhaps people could comment and say what they think.

First house 1975.

We stayed on to get higher degrees.

Financially that was a major mistake☹️

Monica said I have found a chart showing mortgage rates since 1973 www.purepropertyfinance.co.uk/news/a-brief-history-of-average-mortgage-interest-rates/ It doesn't go back to 1969 wen we bought our first house. Our starting rate of interest was 7.25%, or thereabouts. It shows how incredibly high interest rates were for most of us and how incredible low the interest rates have been for the last 20 years giving those who have bought in that period a false sense of security.

That’s interesting. We bought our first house in 1973. I see from that chart that the mortgage rate jumped from less than 8% to over 12% in a short space of time. I well remember it - there was absolutely no certainly as to what the interest rate would be, Afaik, there was no such thing as a fixed rate mortgage.

We had a massive declutter this year and came across monthly letters from the building society informing us of the latest rate rise and what the extra payment would be. It was the likes of and extra £9 or £11pm, for month after month. That doesn’t sound much today but I fed the family on £10 a week, so that was a hefty chunk of money to have to find. The dread of anything going wrong with the car or the boiler or the washing machine was awful.

Even buying the house, prices were rising rapidly. Before we could even apply for a mortgage we had to save for two years with a BS (banks didn’t do mortgages then) and then be interviewed intensively for suitability. When we began looking our price range was about 4K. We ended up paying a deposit on a new-build for a £7,500 house. Before we even moved in the mortgage rate went up and so did the cost, to £8250. We had to sell our car to be able to pay the extra £750.

I recall when rates went up to 15% that I actually stopped worrying, because I figured if we couldn’t afford the mortgage, then nor could millions of others and they couldn’t evict everyone from their homes. We did scrape through somehow.

That said, I don’t think young people have it particularly easy today. It’s harder for them in a different way. I think some of the reason for the huge increase in property values was the free-for-all in the 90’s (I think) when people could get interest-only mortgages, and up to seven times their salary. I know someone who still has an interest-only mortgage and they’ll have to sell their home when they retire as they have no means of paying off the capital they still owe.

Then there’s the lack of house building, or perhaps the wrong type of housing. I am baffled when I see so many five and six bedroom ‘executive’ homes being built - how are young people supposed to afford those? We couldn’t afford one ourselves even after almost 50 years of being a home-owner!

We had higher expectations than our parents started out with surely? I desired an indoor bathroom, a refrigerator, a TV and a garden. My parents started out with none of these things. So all those moaning on about this generation having too high expectations, should think back to their parents or grandparents and what they managed on. Surely it isn’t fair to criticise young people for having higher aspirations? We did.