During the early eighties, during the Thatcher government, mortgage rates went up to 15% and savings rates up to 10%.

Building societies, of which there were a lot more then, would only lend you 3 times the husband’s salary plus a half of the wife’s, this was to try and make sure you were not over extended, also you were expected to put down 10% deposit.

In 1978 I moved house and was paying 6% variable mortgage rate so when it went to 15% it was tough but because banks and building societies encouraged you not to borrow too much and also as a child parents and schools encouraged us to save not borrow most of us got through that tough period and because inflation was running high wages were going up so when mortgage rates came down the proportion of your wages that went for the mortgage was smaller. 

It seems to me that since Thatcher deregulated banks and lots of building society’s became banks and schools no longer teach children to save and avoid debt, people are encouraged to borrow too much so when mortgage rates go up to 6%, which in my day was a low rate, they are overextended and can’t cope. 

Perhaps it is time we went back to old values even if it means for a short time people can’t buy the house they want and have to buy a smaller one or wait longer which might mean the housing market stagnates and house prices fall. But fallen house prices would allow people back to buy and they would also be spending on furnishing, decorating, white goods etc and the economy would start to grow again.

Paul Dakin