Yes but in the “good old days” mortgage interest rates were 9% or higher. Average rates were above 9% continuously from 1978 to 1991. And saving money was easier. Banks paid 8-10% interest rates on savings and CDs. One dollar invested in Dow in 1980 was worth $3.50 in 1990.
Suppose that banks require max 30% housing to gross income. If the mortgage interest rate is 10%, that limits you to 3.1x income and you need to save 62% of your annual gross income for your 20% down payment.
If the mortgage interest rate is 5.5%, you need to save 90% of your annual gross income. You need to save 50 percent more money, even though savings interest rates are approaching zero, and stocks aren’t what they used to be, either. (One dollar invested into Dow in January of 2000 is now worth 91 cents)
