80's house prices & 15% interest..

Because I am no good at working out maths problems like this I would like some .org help.

The number of times I get sick of hearing "oooh you dont know your born, in the 80's we had 15% interest on our mortgages"

What I want to know is if my house in the 80's was worth 30k if that, would I be better of with 15% interest on a 30k mortgage or my mortgage of £150k @ 5.9%?

if it helps I dont remeber the 80's as such as I was born in 85...

I know wages comes into it because they have gone up with inflation but not the same rate as houses, (thats another discussion I have had with oldies)

Cheers all

Alex

[timwilky]

Alex

The mad rates didn't last too long, My mortgage hurt when it went to 15% but 2 years later it was back down, more importantly I had raised my payments when it went up, and never reduced them when it went down. Consequently I paid off my mortgage 8 years early.

So really your requirement should be based on the average annual mortgage rates applicable from 1980. I am sure the rates must be published somewhere. So not just a simple compound interest problem

I remember my mum and dad really struggling when the mortgage rates went up to 15%. They had just bought a brand new house and things were tight anyway. Got to point where mum was considering selling house, when the rates started dropping again. as for actual figures - not a clue sorry

[Bri w]

The problem for people back then was if you got your mortgage based on what you could afford when the rate was lower. When it went up it really hurt. Wages tracked the interest rates but there was always a time lag between whilst they played catch up.

In truth, apart from an opportunity to sign on to a fixed rate mortgage every few years with a sign on fee, you take whatever mortgage you can afford irrespective of how much you may pay back over x many years.

And as Tim says you will get opportunities to pay it off earlier anyway. Its amazing how much difference there is even if you pay off just an extra £10-£20 a month.

[keith_d]

Yep, bought my first house with a girlfriend just before the interest rates skyrocketed. We went from having a decent amount of disposable income to being completely skint within a few months.

Keith.

[L3nny]

My parents bought a 4 bed detatched house in the cotswolds in 1984.

My dad was a school teacher and my mum took time off to look after us kids.

I don't know what he was earning then or how much the mortgage was but I know there is no way a teacher would be able to afford a house like that these days.

[Swin]

my house in colchester went from under £300 per month mortgage to around £550 - completely ruined me for a good few years

[Dave20046]

if you google (would do it for you but I'm posting from my phone) mortgage calculator either Bbc or money saving experts site has one. you can also work out what rate would wipe you out-15%s not quite as bad as you'd think.(but still crippling!)
mse also has a overpayment calculator, like Bri says big differences can be made. obviously dependant on the loan but £50 a month could reduce the loan term by around 5 years (20% of the average term).

my dad bought his first house in the late 80s for less than £30k he did it up himself and sold it a couple of years later for around £80k -sickening!

Originally Posted by Dave20046

if you google (would do it for you but I'm posting from my phone) mortgage calculator either Bbc or money saving experts site has one. you can also work out what rate would wipe you out-15%s not quite as bad as you'd think.(but still crippling!)
mse also has a overpayment calculator, like Bri says big differences can be made. obviously dependant on the loan but £50 a month could reduce the loan term by around 5 years (20% of the average term).

my dad bought his first house in the late 80s for less than £30k he did it up himself and sold it a couple of years later for around £80k -sickening!

thanks for that I just googled it and I would be £250 a month better off on 80s house prices and 15% interest than I am on 2008 house prices and 5.59 % interest.

put that in your pipe and smoke it "in my day" gramps

[Biker Biggles]

I recall rates going to 15% on "black Monday" when Norman Lamont took us out of the EU exchange rate monetary system to avoid economic collapse(think Greece and the Euro) but that rate never actually happened as they cancelled it the same day.Im convinced that 15% interest rates are an urban myth.It may have gone over 10% briefly but never 15.