1970s Britain | Mortgages through the roof | interest rates | Housing market | This Week | 1973
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- Опубліковано 17 жов 2024
- Jonathan Dimbleby speaks to Mortgage lenders and the former Chancellor of the exchequer Reginald Maudling about what the Government and banks and building societies can do to help the beleaguered house buyer.
Interviewees:
Reginald Maudling
Anthony Crosland - Shadow minister of the environment
Roy Cox - Alliance building society
First shown: 30/08/1973
To license this clip please e mail: archive@fremantle.com
Quote: VT8188
Five weeks after this, war broke out in the Middle East, oil prices trebled overnight and inflation soared. So far from falling as Reggie Maudling thought, interest rates were forced up.
Very interesting. Thanks Thames, we’ve been missing this kind of videos.
I’ve made a comparison: In 1973 10k is about 155k now, and that’s why 6% or 7% mortgage is just as painful as 10-11% in 1973. The average houseprice has risen more than average wage. More than doubled. All helped by idiotic low interest rates of the last 15 years.
hah, low interest rates make homes CHEAPER. the real reason houses cost more is that the asking prices are much more.
The average UK house price was £30,000 in 1984, and average wages were £9,100 per annum (a multiple of 3.29x). Today, the average house price is £286,000 and the average wage is £31,616, a multiple of 9x. In other words, adjusted for inflation, houses cost nearly three times as much today (2.7x). The Bank of England boss should be fired for hiking interest rates.
Over the last 100 years of publicly available data, overwhelmingly, rate rises precede inflation (ergo, interest rate hikes are one of the CAUSES of inflation). 95% of money is bank credit, so rate hikes make money more expensive, which makes everything more expensive.
@@BOZ_11 Do you want to drill down further into why asking prices are much more today compared to 40 years ago? Supply and demand.
Let's look at London for example. What has changed in London between 1981 and 2021?
@@disgruntledoflondon it's two prong my chubby friend. Firstly, 9 million more people today than just 21 years ago. Secondly, foreign investors investing in UK real estate, the vast majority in London and the South East of England. Workers DO NOT have the purchasing power to move these needles, only the rich can. Foreign ownership (non-citizen, non-domiciled!) UK real estate value is now £122 billion. At the current average house price, that is 427,000 houses or 545,000 flats
@@BOZ_11 you turn cause-effect around and makes your complete reply wrong. If people can’t borrow the money because of high interest rates, house prices go down. They went sky high during the last 15-20 years with low rates, cause it was affordable. You could borrow 350k with only 1000 pounds a month.
Or I totally don’t get your reaction?
Central banks hike interest rates to stop spending, making lending unaffordable, driving prices down (or stop going up). This time again, just like in the early 70s the bank was too late with modest increases to stop the worst.
@@JJVernig the current spate of inflation has been caused by a 70% increase in energy prices, price gouging by large businesses and a series of BoE rate hikes. Since 95% of the money in circulation is bank credit, a rate hike makes money itself more expensive, making all goods and services more expensive. Since consumer spending was never the cause of the increase (as I stated above, chubby), making people poorer was to blame the blameless. 99% of mortgages were signed before the rate hikes, and home ownership rates are falling, since housing stock is being concentrated into fewer hands (the rich don't apply for mortgages, silly)
Just for context. The average house price at the time this was filmed in 1973, was £9,900. The average wage that year was £27, so £1,400 per annum. So house prices were around 7 x average earnings in 1973. That's what's key when comparing. This year, average annual salaries are around £28,500, and the average price of a house today is about £285,000, so 10 x average annual salary. So in comparison, things are a little easier today than the higher interest rates rates back then, all things considered. However, this is only part of the story. The basic tax rate then was 30%, compared to 20% today, however there was no national insurance back then, whereas now it is about 12%, so a notional tax rate today of about 32% (on average salary and ignoring allowances). VAT was introduced in 1973 at 10%, whereas today it is 20%. But what we didn't have then, compared to what we have now, is tax on almost everything - home, travel and car insurance, air passenger duty, much higher duty on tobacco, alcohol, petrol etc., although food is a bit cheaper today (ignoring the ridiculous prices rises in the last 18 months). All in all, overall things back then, financially, were a bit better than today. Although having said that, many families back then earned just one wage, as most women were housewives, whereas today most women work, plus families get shedloads of tax credits, childcare help and the like today, so factoring all that in, I guess things are quite a bit better today. Also, interest rates are almost half today what they were back then, and 33% of properties today are mortgage free, whereas back then probably much lower (I don't have those figures, but thanks to the last 15 years of almost zero rates, a LOT of people have paid off their mortgages today). So yes, people may bleat about things today, but as the old saying goes, they've never had it so good!
Yes, we've got Calamity Brown and his uncosted, unfunded tax credits system....funded by all those stealth taxes to blame.
When child care costs are virtually the same as the salary earned,...then that is sheer economic madness.
The mother/single mother might as well stay at home and bring up her baby....like in the good old days.
A good thoughtful post.
Alot of bleating now; in those days, saving for the inevitable rainy day was usual.
Very contradictory comment...
Back then was better than today then today is better than back then?
Very interesting....nothing new under the sun 😊
I try to tell people this all the time
It's like we've come full circle. Back to the pre common market days of the early 70s
Indeed - and the poorly negotiated new trade deals means we are set to be flooded with cheap agricultural imports and products which undercut our farmers and the uk manufacturing industry (like was happening in the mid 60s and early 70s). Wont surprise me if we are trying to get back in eu in few years.
Except it’s not just the UK that’s having this problem.
@@nathanjustus6659 Average OECD wages were lower than average UK wages, and had been since the metric started. Currently, the OECD average and UK average wages are level/even; with UK wages projected to fall BELOW the OECD average for the first time ever. Maybe stop listening to Tory politicians who are in the business of fooling you and courting donor money
@@BOZ_11 I’m not British so I’m not listening to Tory politicians. Decline in American wages has been precipitous and extraordinarily bad particular for young people. So this is not something that is unusual anywhere.
@@nathanjustus6659 I'm not comparing to a static metric, I'm comparing to OTHER COUNTRIES (when using the OECD average). Do you understand?
Foreign investors ...... sounds familiar .
The more things change, the more they remain the same.
Thumbnail looks like from Monthy Python :)
Went up to 17% by 1979….and were around 15% when I got married in 1990.
Anyone would think there some sort of deliberate cycling here……🤔
At least in those days the residents of Britain were British.
Gammon
Racist
Yawn
Paying the price of Blair's open borders insanity.
We've lost forever our wonderful quality of life.
Import the 3rd world - become the 3rd world.
Cheers Blair - cheers Labour.
@@malthusXIII-fo3ep The tories are doing the literal same for the last 13 years unless you’ve been living under a rock and not paying attention to your surroundings