Earlier this week, I wrote a piece detailing the worries some young people have about high mortgages rates – and why it was putting them off buying.

Mortgages got comfortably below 4 per cent at the start of 2026, but since the Iran war started back in February, they’ve been far higher, and it’s deterring some first-time buyers from dipping their toe into the market.

One woman I spoke to said she wouldn’t be buying until rates got below 4 per cent again.

Shorts

When the article was posted on social media, a number of the responses of readers were painfully predictable.

“High!? 5 per cent isn’t high! Try 12 per cent.”

The reaction is the same when I write about the concern people who are renewing their mortgage have – with responses often coming from those in their sixties and seventies.

These people likely bought their first homes in the 1970s and 1980s. As a result they would have faced the extremely high and volatile mortgage rates seen during that period.

In 1989, the Bank of England’s base rate – which has a heavy bearing on loan costs – peaked at nearly 15 per cent, with mortgage rates averaging 14.44 per cent across that year as a result, according to building society data.

Average rates today, which Moneyfacts data suggests are around 5.48 per cent, pale in comparison.

But here’s the key thing. Let’s say you bought your property two years ago, and your mortgage is now coming up for renewal.

You have a bought at an average 2024 price of £262,000 with a 10 per cent deposit on a 25-year term.

Now, at a 5.48 per cent mortgage rate, your new mortgage is likely to cost you around £1,450 per month. Average wages are £39,000, so annually, this equates to around 45 per cent of a typical gross wage.

Let’s compare that to someone two years into a mortgage in 1989. House prices two years prior had averaged around £36,000.

Two years in, assuming a similar deposit and term length, they will be looking at a mortgage of around £400 on that 14.44 per cent rate. Average wages were around £14,000, so annually, this equates to around 35 per cent of a typical pre-tax wage.

In other words, the higher house prices now means simply comparing 1980s mortgage rates to today’s is not a fair comparison.

Three years ago, analysis for The i Paper by Savills estate agency, similarly found that 2020s first-time buyers have it worse than those in the late 1980s, when the difficulty of saving for a deposit and mortgage payments were both factored in.

If you’re a young person you’ll undoubtedly know this already but it seemingly still needs explaining.

Obviously, you can do the calculations lots of different ways and come to slightly different figures.

You can also point out extra factors that those in the 1980s had to contend with – the rise in mortgage rates as more sudden than seen recently, people were having to deal with larger scale unemployment, and more families got by on a single income.

But the simple conclusion is that mortgage rates alone, whilst currently lower than they were in decades gone by, do not tell the full story.

Our current housing market has been built upon years and years of low rates. Buyers now are more sensitive to higher rate and a mortgage rate of 5 per cent is undoubtedly high for most.

So, if you’re in your 60s and telling young people today that their mortgage rates aren’t that bad actually, it might be time to consider how much value you’re adding to the debate, or if you’re being a bit of a pub bore.



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