'Mortgage rates of 14.5% aren't science fiction' blog discussion

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.

Please click 'post reply' to discuss below.


  • I went though this last time. When we were looking for our first mortgage, and I couldn't believe the amount of money banks were willing to lends us. My wife and I just bought something smaller as it's didn't make sense that we could borrow so much money. We were glad we had when the rates went up and up over the next few years. Don't be too scared, but do your homework as to what you would pay if rates went up. I did end up buying an endowment mortgage though, so I didn't get everything right!
  • Old_Git
    Old_Git Posts: 4,743
    First Post First Anniversary Mortgage-free Glee! Cashback Cashier
    I paid 11.5% in 1991 and the 1980s had even higher rates ,that was the norm .No internet for checking the best deals ,people rarely changed lenders ,but you had to live within your means ,no digital TV or broadband .I didnt even have a landline and beans on toast became the norm.
    For all you first time buyers ,you dont need a four bedroom house or a conservatory .
    "Do not regret growing older, it's a privilege denied to many"
  • savemoney
    savemoney Posts: 18,127
    First Post First Anniversary
    edited 7 October 2013 at 11:02PM
    We bought our first house in Nov 1989 according to BOE rate was 14.8750. Fortunately at that time we on a deferred mortgage rate I think Halifax called it a career mortgage it was only a few years later when we paid price for that decision so ended up doing a lot of hours at work which did have a knock on effect on family life

    Have to agree with Old git you dont need 4 bedroom for first time unless you got a large family. I started off small 2 bedroom terraced costs in 1989 37ksold it in 2007 raised 2 kids there both females. Makes me laugh some of these property programs raising peoples expectations.Nothing wrong starting small and building up dare I say it having hand me downs too, much rather it be that way and not have to borrow money for goods. As old saying goals "live within your means" Its true you never know what's around the corner.
  • jamesd
    jamesd Posts: 26,103
    Name Dropper First Post First Anniversary
    The interesting thing then isn't just the mortgage interest rates, but inflation. While the mortgage rates were high, so was inflation, so if you could keep up it rapidly became very cheap to clear the mortgage with lower value Pounds as incomes rose.

    Those times were also classic housing ladder times, because of the ability to relatively quickly pay off a mortgage and upsize. That's tougher without high inflation and wage increases.

    Those same low inflation and low wage rate times combined with low mortgage rates can tempt people to buy a property that is too expensive to be prudent, leaving them in more trouble if rates rise significantly. The housing ladder still exists, but now it's up to people to do it to be prudent, not because current interest rates force it.

    An offset mortgage is one of the useful forms of protection against high interest rates. If necessary you can transfer other funds into the offset account to reduce the interest cost, without taking investment risk.
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