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Individual loan products from lenders would have been slightly different to rate shown in the graph. So "almost 20%" isn't that far off.

nl 12y ago
I'm old enough to remember rates in the 80's (though not old enough to have had one!). And I have a loan now, and the rates almost exactly match the rates in that table. Here's another reference: http://www.abc.net.au/news/2007-08-08/the-reality-of-interest-rates/2525330 http://www.abc.net.au/news/2007-08-08/the-reality-of-interes... 17% was as high as they got for mortgages.
- vacri 12y ago
  Well, I guess my argument is completely blown out of the water because they peaked at 17% (I guess 17 is not near 20...) instead of 18-19%, and averaged around a couple of percentage points lower. Hardly a "pretty big exaggeration". It doesn't change the fact that mortgages, regardless of the percentage rate, were still not 'easy' back then. The smaller mortgages were not being paid off with today's rates and today's pay packets. They also had fewer flexibility features (things like redraw or offset accounts).
  - frobozz 12y ago
    Yes, but in the period you state, when the average wage has risen by 50%, the average house price has risen by over 200%, and RPI has risen by 117%. It's true that back then, the average monthly mortgage payment might have been similar, if not slightly more (adjusted for inflation). However, a lifetime fixed rate is unusual and they would have moved to lower rates when they came available. Also back then, more people had a 'job for life', defined benefit pensions, and inflation-matching or beating pay rises without the risk of moving to a new company. One could be reasonably confident that if a mortgage was affordable now, it would continue to be so in the future. Nowadays, with stagnant wages, interest rates that can only go up, and the need to invest more into personal pension funds in order to mitigate the risk of retiring at a market low point.

nl 12y ago

I'm old enough to remember rates in the 80's (though not old enough to have had one!). And I have a loan now, and the rates almost exactly match the rates in that table. Here's another reference: http://www.abc.net.au/news/2007-08-08/the-reality-of-interest-rates/2525330 http://www.abc.net.au/news/2007-08-08/the-reality-of-interes... 17% was as high as they got for mortgages.

vacri 12y ago
Well, I guess my argument is completely blown out of the water because they peaked at 17% (I guess 17 is not near 20...) instead of 18-19%, and averaged around a couple of percentage points lower. Hardly a "pretty big exaggeration". It doesn't change the fact that mortgages, regardless of the percentage rate, were still not 'easy' back then. The smaller mortgages were not being paid off with today's rates and today's pay packets. They also had fewer flexibility features (things like redraw or offset accounts).
- frobozz 12y ago
  Yes, but in the period you state, when the average wage has risen by 50%, the average house price has risen by over 200%, and RPI has risen by 117%. It's true that back then, the average monthly mortgage payment might have been similar, if not slightly more (adjusted for inflation). However, a lifetime fixed rate is unusual and they would have moved to lower rates when they came available. Also back then, more people had a 'job for life', defined benefit pensions, and inflation-matching or beating pay rises without the risk of moving to a new company. One could be reasonably confident that if a mortgage was affordable now, it would continue to be so in the future. Nowadays, with stagnant wages, interest rates that can only go up, and the need to invest more into personal pension funds in order to mitigate the risk of retiring at a market low point.