Since the 1950s, the number of homeowners has jumped from one in three people to two thirds of the adult population. The average house price has soared by 7,578 per cent, from £2,100 in 1952 to £161,937 in 2012, according to Halifax. But in the 1950s, prices were much lower relative to earnings — around 3.5 times the average salary compared with 4.8 times over the past decade, so it was more affordable to get on to the property ladder.
It would have cost around £160 a year over a 20-year mortgage term to buy a typical home in 1952, but at that time around two thirds of properties had no hot water.
In March of that year, the Bank of England base rate increased from 2.5 per cent to 4 per cent, but many borrowers had fixed-rate loans and would not have been affected. Typical mortgage rates are not so dissimilar now to the early 1950s, when they stood at between 4 and 4.5 per cent. Today the average two-year fixed-rate mortgage costs 4.72 per cent according to Moneyfacts.co.uk, the financial website.
There has been a return to more cautious lending, with lenders once again requiring a high deposit. At the start of the Queen’s reign, a 20 per cent deposit was essential, but now it is still desirable in order to access the cheapest rates. In the 1950s, building society managers had a preference for lending to customers who they knew well, because they had a good local standing as regular churchgoers or as other visible members of the community, such as teachers.
Since lenders were burnt in the recent credit crunch after waiving income checks and taking on borrowers with a patchy payment history, they are once again seeking to glean as much information as possible about future customers. Now, a mortgage interview might throw up questions such as how much you spend on holidays and haircuts, but it will be your credit file that will give your lender the most detailed insight into your suitability for a loan.
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Sixty years ago, a woman would have needed her husband or father to act as a guarantor in order to qualify for a mortgage. While this is no longer the case, a report by Noreena Hertz, an economist at the University of Cambridge Business School, accused banks of continuing to discriminate against women who are pregnant or on maternity leave when they apply for a mortgage.
Ray Boulger, senior technical manager of John Charcol, the mortgage broker, says that high inflation has been the main driver of house price growth over the past 60 years as it began to accelerate in the late 1960s and the retail prices index hit nearly 27 per cent in 1975. “People began to realise that the easiest way to benefit from high inflation was by owning their own property, as it was the one substantial physical asset people were able to acquire by borrowing, and everyone has to live somewhere.”
• ‘Appalling housing situation’
Peter Short, 82, a retired television engineer who now lives in Wythall, near Birmingham, says that it was impossible for him to get a mortgage on his first home.
In 1955, after a decade in the Royal Air Force, he needed to find a home in London as he was starting a new job in television. He was newly married with a baby and found a small two-bedroom house in a Victorian stables in Hammersmith with an outdoor toilet and no running water. It was due to be demolished in a few years’ time as part of the Government’s slum clearance efforts, but Mr Short was so desperate for somewhere to house his family he was prepared to buy it anyway.
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He says: “When I tried to get a mortgage, they just laughed at me.” In the end the owner sold him the home for £90 upfront and allowed him to pay back the rest of the £330 purchase price over the next two years. After that the council bought the property back from him before its demolition, and the Charing Cross Hospital now stands on the site.
He says: “The housing situation in London was appalling.” While working as an engineer, he remembers visiting one street in Notting Hill where the loft ran along the whole length of the terrace and 100 beds were lined up next to each other.