6th April 2000. A Monkey on the Chimney.
The heading relates to an old saying of the burden of having to finance a mortgage.(1)
A teacher’s annual salary in 1900 was up to £200, two-thirds of the cost of a three-bedroom terraced in parts of London. Today one would need a salary of £200,000+.
In the 20thc prices took off when they doubled, admittedly from a low base, between 1971-1973, when the author bought a house. There was a five-fold increase in prices in the 1970s. (2)
They rose c60% in the 1980s, in real terms, then came slump with Negative Equity, then came a marked revival in the first decade of the new millennium.
One of the stimulants to purchase was Miras, (‘mortgage interest relief at source’) which enabled people to claim tax relief up to a certain level of mortgage.
However Labour Chancellor ‘Prudence’ Brown from Today in 2000, abolished Miras, as he regarded it as a ‘middle class perk’, overturning Harold Wilson’s attempt in 1967 to assist the low paid by subsidising Mortgage Interest Rate.
Mortgages were originally sold only by Building Societies, as a consequence thrifty mothers, as with the author, encouraged children to invest with societies such as the Co-op Permanent (later the Nationwide), to build up goodwill for a future mortgage, then restricted to about 2/3 times annual wages.
It was a time when Building Societies came to agreements on mortgage rates, which ostensibly, with government benign approval, helped price stabilisation. Then came competition in 1971, when Tory, Ted Heath, allowed High Street Banks to sell mortgages.
Gone went Building Society loyalty at a time which coincided with rising house prices, in line with a government inspired credit boom and wider use of Credit Cards, introduced by Barclays Bank in 1967.
People’s aspirations were also rising to become owner occupiers and between 1953 and 1971 owner occupation went from 32% to 51% and by 2000 c 70%.
However the phenomenon from 2000 has been the dramatic rise of houses ‘for rent’. Those seeking to buy sought mortgages at about 4% or 5%, with variations: fixed, flexible, endowment or interest only.
(1) Whimsical evidence can be see in 19thc buildings, including banks, designed by Watson Fothergill in Nottingham, which show stone monkeys, some holding a chain, suggesting how one is chained to the banks for loans.
(2) A semi in Burton-on-Trent, Staffs rose from c £1500 to £3000.
In the 1970’s Bank Rate was over 4%. In the high inflationary year of late 1966, it was 7%; in 1979 at 17%, by July 10th 2003 it was 3.5%. Mortgages would have higher.
So in 1983 Bank Base Rate was 11% with mortgages of up to 15%.
Ref: sosmartmoney.co.uk/Get a Mortgage.
Ref: theguardian.com/money.18.12.1999. Jonathon Justice.
Ref: statichalifax.co.uk/20.1.2010/50 years of Housing.