Bloody Hell! How old am I?

[stevensfo]

Bank of England announces biggest interest rate hike in 27 years.

https://uk.finance.yahoo.com/news/bank- ... 04272.html

1.75%?

There was a time when a low interest rate like that would have had us celebrating all night. For our our first mortgage, our bank offered a fixed rate of 10% or a variable rate.

I do try and keep up with the news about inflation (12%?) and interest rates, but cannot really get my head around it. Both bad if they're high but bad if they're too low?

When can we go back to the good old method of bartering? We'll iron 10 shirts for two fillet steaks and we'll give you 10kg firewood if you mow our lawn.

Taxes will be illegal and the NHS replaced by the Wise Woman of the village.

Expensive medical costs, like anaesthetic, will be replaced with 'Barry Manilow's Greatest hits'.

Steve

[pje16]

I'm sure someone will beat me BUT
my first mortgage was fixed for 2 years at 11% when the SVR was 13.75%

A few years before that I had a bank paying me 15% on my savings (which became my house deposit)

[UncleEbenezer]

With a bit of luck, rising rates will finally help make houses more affordable for the next generation, despite government's best efforts to pump them ever upwards. Back to something closer to your experience.

Or maybe Truss will have a stroke of genius and stop pushing ever upwards (how much does she personally own)?

[kiloran]

I'm sure someone will beat me BUT
my first mortgage was fixed for 2 years at 11% when the SVR was 13.75%

A few years before that I had a bank paying me 15% on my savings (which became my house deposit)

I think this thread is heading into Four Yorkshiremen territory

--kiloran

[mc2fool]

When can we go back to the good old method of bartering? We'll iron 10 shirts for two fillet steaks and we'll give you 10kg firewood if you mow our lawn.

I'll iron 10 shirts for you for two fillet steaks. Deal!

I'm sure someone will beat me BUT
my first mortgage was fixed for 2 years at 11%

Mine was 16% variable and they put it up to 18% when I told 'em I was going to rent the house out.

Well when I say 'house' it was only a hole in the ground covered by a piece of tarpaulin, but it was a house to US.....

[pje16]

Well when I say 'house' it was only a hole in the ground covered by a piece of tarpaulin, but it was a house to US.....

You were lucky...
We used to live in one room, all hundred and twenty-six of us, no furniture

PS @kiloran take note

[scrumpyjack]

I'm sure someone will beat me BUT
my first mortgage was fixed for 2 years at 11% when the SVR was 13.75%

A few years before that I had a bank paying me 15% on my savings (which became my house deposit)

I think this thread is heading into Four Yorkshiremen territory

--kiloran

I'm not a Yorkshireman but I had a mortgage like that. My brother and I bought a wreck of a house together in 1971 on finishing Uni.

It cost £20k but it was 4 storeys and in Notting Hill and in those days mortgage interest was tax deductible.
A great strain at the time but it really worked out very well in the end

[pje16]

in those days mortgage interest was tax deductible.

ah yes I recall that
just googled it, it was stopped in 2017... feels like longer ago though

[scrumpyjack]

in those days mortgage interest was tax deductible.

ah yes I recall that
just googled it, it was stopped in 2017... feels like longer ago though

In those days it was deductible at your highest rate of tax, which was as high as 98%
Later it was reduced to basic rate relief only

[Dod101]

in those days mortgage interest was tax deductible.

ah yes I recall that
just googled it, it was stopped in 2017... feels like longer ago though

Known as MIRAS, not that I ever benefited from it. Anyway I am not bothered about higher interest rates and feel they should have been increased some time ago. The question is though whether they will actually help curb inflation.

Dod

[AsleepInYorkshire]

Anyway I am not bothered about higher interest rates and feel they should have been increased some time ago.

The question is though whether they will actually help curb inflation.

Wrong question I'd suggest. How much do we pay the Chancellor of the Exchequer and the BoE CEO and executives to carry on doing what we've always paid them a lot of money to do?

AiY(D)

[XFool]

in those days mortgage interest was tax deductible.

ah yes I recall that
just googled it, it was stopped in 2017... feels like longer ago though

Eh? 2017? It was abolished much longer ago than that. You need to Google again. It was abolished in 2000.

https://en.wikipedia.org/wiki/Mortgage_interest_relief_at_source

Must say, I thought it was even earlier than that.

[Lootman]

With a bit of luck, rising rates will finally help make houses more affordable for the next generation, despite government's best efforts to pump them ever upwards. Back to something closer to your experience.

It would be luck. Interest rates are going up because inflation is going up, which means that wages and prices are going up, all of which puts upward pressure on home valuations.

Back in the 1980s when we had the mortgage rates that others are talking about (and mine was 16% for a while as well) home prices still went up nicely. As a real asset property is a decent inflation hedge.

Also one third of houses in the UK are bought for all-cash so mortgage rates won't affect those at all.

[pje16]

in those days mortgage interest was tax deductible.

ah yes I recall that
just googled it, it was stopped in 2017... feels like longer ago though

Eh? 2017? It was abolished much longer ago than that. You need to Google again. It was abolished in 2000.

https://en.wikipedia.org/wiki/Mortgage_interest_relief_at_source

Must say, I thought it was even earlier than that.

thank you
so my memory isn't failing me
I hadn't noticed the word landlords earlier
https://taxscouts.com/landlord-tax-retu ... f-changes/

[SalvorHardin]

With a bit of luck, rising rates will finally help make houses more affordable for the next generation, despite government's best efforts to pump them ever upwards. Back to something closer to your experience.

It would be luck. Interest rates are going up because inflation is going up, which means that wages and prices are going up, all of which puts upward pressure on home valuations.

Back in the 1980s when we had the mortgage rates that others are talking about (and mine was 16% for a while as well) home prices still went up nicely. As a real asset property is a decent inflation hedge.

Also one third of houses in the UK are bought for all-cash so mortgage rates won't affect those at all.

Indeed. With price and wage inflation being much higher than mortgage rates, people are being highly incentivised to take out as big a mortgage as they can realistically service. This is going to push up house prices still further. If the base rate was to rocket to something like 15% as seen in the early 1990s then that would hammer the housing market, but realistically that's about as likely to happen in the next few years as me opening the bowling for Somerset.

Until there's a serious effort at removing the green belt restrictions, the undersupply of housing in the UK is going to continue to provide a lot of support for house prices.

I've just had a look at what I've bought since Russia invaded Ukraine. Except for Games Workshop, Mulberry and some defence companies, everything else is a property-based inflation hedge. Commercial property (Derwent London, Empire State Realty, Great Portland Estates, Schroder REIT, TR Property), Residential Property (Grainger), Real Asset / Infrastructure Owner-Managers (Brookfield, Carlyle, Patria, HICL Infrastructure) and Farmland (Farmland Partners).

[Lootman]

With a bit of luck, rising rates will finally help make houses more affordable for the next generation, despite government's best efforts to pump them ever upwards. Back to something closer to your experience.

It would be luck. Interest rates are going up because inflation is going up, which means that wages and prices are going up, all of which puts upward pressure on home valuations.

Back in the 1980s when we had the mortgage rates that others are talking about (and mine was 16% for a while as well) home prices still went up nicely. As a real asset property is a decent inflation hedge.

Also one third of houses in the UK are bought for all-cash so mortgage rates won't affect those at all.

Indeed. With price and wage inflation being much higher than mortgage rates, people are being highly incentivised to take out as big a mortgage as they can realistically service. This is going to push up house prices still further. If the base rate was to rocket to something like 15% as seen in the early 1990s then that would hammer the housing market, but realistically that's about as likely to happen in the next few years as me opening the bowling for Somerset.

Now you mention it, yes, those 16% mortgages were in the very early 1990s and not the 1980s. And the London property I bought in 1991 sold for only slightly more in 1998. So mortgage rates that high do spoil the house price party, but even so prices still didn't go down - they merely stagnated.

In the 1980s I can recall mortgage rates of about 9% or 10% at times. But the London property I bought in 1984 sold for three times more when I sold it in 1991. So mortgage rates that high were no impediment to making money on property.

I was fortunate in that from 1976 to 1994 I worked for financial institutions that had subsidised mortgage rates for employees. A couple of mortgages I had around that time were at about 3% when others were paying 3 or 4 times that. It came as a shock to me when I had to pay full whack on home loans but by then rates had come down a fair amount and have continued to. A 3% mortgage would not be much of a job perk these days.

[mc2fool]

Now you mention it, yes, those 16% mortgages were in the very early 1990s and not the 1980s.

My 16% mortgage was in 1981.

[Lootman]

Now you mention it, yes, those 16% mortgages were in the very early 1990s and not the 1980s.

My 16% mortgage was in 1981.

I found this chart showing a peak in UK mortgage rates in the early 1980s, then a decline, then another and slightly higher peak around a decade later:

https://fred.stlouisfed.org/series/HVMRUKQ

[mc2fool]

Now you mention it, yes, those 16% mortgages were in the very early 1990s and not the 1980s.

My 16% mortgage was in 1981.

I found this chart showing a peak in UK mortgage rates in the early 1980s, then a decline, then another and slightly higher peak around a decade later:

https://fred.stlouisfed.org/series/HVMRUKQ

Hmmm....yet that peaks at 15% in 1980/81 while this chart of BoE base rates shows base rate at 17% in 1980/81, and I don't recall mortgage rates ever being less than base rate (may be memory failure on my part of course ). https://thinkplutus.com/uk-interest-rate-history/

I dunno overall, I just know that when I got my mortgage in 1981 it was 16%....

[moorfield]

We certainly have lucked out from the era of low interest rates - bought my first (tiny) bachelor pad in 1998 a few years after graduating, just as interest rates were beginning to drop regularly. W1 (Cleveland St). Paid off the mortgage by 2003 then sold it. Biggest regret of my life, but it was structurally unsound and I had acquired a girlfriend (now wife) and moved onto Putney. And thence to Moorfield Towers on an offset tracker +25bps which we still have and the funds to redeem but it's too good a deal not to while we are working and want to keep the option of borrowing back quickly.