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Rare Bear

Found An Old Letter Today, Mortgage Rate Down To 14.5%

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Found and old letter today, 1990, informing us the the interest rate we were paying on the mortgage was now down to 14.5%. Mind you, I there had been a surcharge of either 1% or 1.5% for the first year because it was 100%.Montly payment down to £550 plus the endowment. At the time I was insanely jealous of a guy who worked in the same place as me and who was on £12,500.

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Ahh, but what about MIRAS.

How did the endowment perform?

Miras was 25% at that time, gradualy phasing out.. Endowment, paid in about £22,000 overall and got back £44,000. Mortgage was for £55,500 but I'd paid off most of it so I ended up with a chunk of cash. I havn't done the sums but I probably did better overall tha with a repayment, given that I would have had to have a seperate life insurance policy as well.

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Found and old letter today, 1990, informing us the the interest rate we were paying on the mortgage was now down to 14.5%. Mind you, I there had been a surcharge of either 1% or 1.5% for the first year because it was 100%.Montly payment down to £550 plus the endowment. At the time I was insanely jealous of a guy who worked in the same place as me and who was on £12,500.

Ah yes, we got our first mortgage - 100%, interest-only, 2x joint salary, plus a linked Endowment - at that rate at the end of 1990. Nice, newish 3-bed house for £65k. They are on the market for about £190k these days.

When we found out around 1995 that the house was then worth only £55k we cashed in the Endowment, put it into the outstanding mortgage and switched to repayment.

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A few years ago I found a mortgage statement of a rental property I was living in in some rubbish. It was from 1998 and had the property valued at £25K, it also had a previous valuation from 1988 also at £25K. Sold in 2005 for £105K and I was paying £500pm rent at the time in 2009. I think now it would be worth perhaps £110K and still rent at £500pm.

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Squeaky bum time came not long after that:

1992: UK crashes out of ERM

The government has suspended Britain's membership of the European Exchange Rate Mechanism. The UK's prime minister and chancellor tried all day to prop up a failing pound and withdrawal from the monetary system the country joined two years ago was the last resort. Chancellor Norman Lamont raised interest rates from 10% to 12%, then to 15%, and authorised the spending of billions of pounds to buy up the sterling being frantically sold on the currency markets.

But the measures failed to prevent the pound falling lower than its minimum level in the ERM. The second rise in the interest rate was reversed by the beleaguered chancellor soon after the withdrawal from the ERM, setting it at 12%. The move is a dramatic U-turn in government policy, as only last week Prime Minister John Major reaffirmed the government's commitment to remaining within the mechanism. Mr Lamont admitted it had been an extremely difficult and turbulent day, but a Downing Street spokesman said he would not resign.

The shadow chancellor, Gordon Brown, said colossal errors of judgement by the prime minister and chancellor had betrayed the British people. Liberal Democrat leader Paddy Ashdown said the government's policy had failed. "They have lost control of the economic situation," he told the BBC. But both politicians stopped short of calling for the chancellor's resignation.

Britain's decision to join the ERM in October 1990 represented a major shift in the direction of the government and has become a cornerstone of the country's European policy. But Conservative MP for Stone William Cash, said the policies of the government and the chancellor should now be reconsidered. "I think that the position of Norman Lamont at the moment is extremely precarious... We are in a state of political shambles," he said.

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