🧠💸 What 1980s Mortgage Pain Can Teach Us About Today’s Market
If you've ever heard your parents (or grandparents) say, “You think your mortgage is bad? Back in my day, rates were 20%!” — they’re not wrong. 😅
But here’s the twist: it’s not as simple as high rates = more pain. Let’s dig into what the 1980s were really like for homebuyers—and how things stack up against today.
🔙 1980s: When Mortgage Rates Hit 20% (Seriously)
Yep. You read that right.
In June 1987, the average mortgage rate hit 20.5%. And that wasn’t even the worst of it—some borrowers had second mortgages at even higher rates. There were price freezes, credit rationing, and major inflation. Fun times, right?
But here’s the interesting part: while rates were high, so was inflation. That meant your salary went up faster, and the real value of your mortgage went down over time.
So, even if you were spending a big chunk of your income on your mortgage in year one, by year three or four, your income had grown so much that payments felt lighter. For example:
➡️ In 1987, payments were 48% of income
➡️ By 1989? That number dropped to 32%
📉 And by the late ’90s, some homeowners were only spending 4–7% of their income on their mortgage!
📅 2020s: Lower Rates, But Bigger Debt
Now, let’s fast forward.
Mortgage rates in 2021–2022 were way lower—often around 1.5–2.5%—but the size of the mortgages? Much higher.
Buyers in 2021 often bought at the top of the market. Fast-forward to 2025 and many of those homes are now worth 15% less. On top of that, today’s rates are hovering around 4.75%, and inflation isn’t helping us grow out of our debt the way it did in the 1980s.
So while rates look better on paper, the debt-to-income ratio is higher, and it’s taking a bigger bite out of people’s paycheques for longer.
🟢 The Good News?
Things are shifting again.
A new report from Cotality says housing is now the most affordable it’s been since 2019:
✔️ Mortgage rates are settling
✔️ Incomes are holding steady
✔️ Home values are down about 17%
✔️ Mortgage payments now average 44% of median income (and trending lower)
So no, it’s not perfect. But it’s moving in the right direction. 🙌
💬 What Does It All Mean?
There’s no perfect era to buy a home. Every generation has its own “mortgage pain.” But here’s what always matters:
📊 Your personal budget
💡 Your long-term plan
💬 Good advice from someone who gets it
Whether you’re just starting to think about buying, or you’re feeling stuck in your current mortgage, I’m here to help you make sense of it all—without the overwhelm.
📲 Text me anytime at 519-575-1804 or come say hi on Instagram @behomewithcharly
We’ll talk money. And mortgages. And maybe even 80s music.
Let’s make it make sense. 💛
xo,
Charly