I agree that the average wage now makes it impossible to buy the average house for many people. This is a trend that has been going on for decades and has now reached crisis point. There are plenty of people in my village 20 years older than me who have much bigger, more expensive houses than me simply because they bought them when there was a smaller gap between incomes and house prices. I was lucky to be able to afford to buy a house but it’s much smaller than if I was older. Younger people have now been priced out completely in some areas.
However, I was one of those young people paying 15% interest on their mortgage in the 1990s. If I use your figures and assume a 10% deposit, a person buying an average house on an average income was paying 38% of their PRE-TAX income on their mortgage back then before paying any of the capital back. Someone paying 6% today on average house, 90% mortgage and average income will be paying 34.6%. So yes, it’s comparable.
The difference is that the average income no longer makes the average house affordable. Therefore the person buying in the 1990s may have been lucky enough to afford a 2 bed house but be paying 38% of their pre tax income on just the interest. I was one of them. It was brutal. Today, the same person might be living in a 2 bed flat. They therefore will not be paying a mortgage on an average house price. If someone on average income took out a mortgage of just under 4 times their income to buy the flat then that’s a mortgage of about 145,000 (plus deposit). 6% mortgage interest only is £8,700 year, or 23.4% of their pre tax income. Still more affordable than the 1990s 38% of pre tax income by a long way.
People will be stretched, but hopefully we won’t see the mass repossessions of the 1990s. The fact that they can only afford a flat rather than a house is a different issue.