Back in 1978, the only sort of mortgage in the UK was a variable rate mortgage. Household finances were tied at the hip to the macro policy toolkit. In fact, they were a large part of the monetary policy transmission mechanism. Policymakers sought to tame inflation by squeezing the finances of all indebted households such that it forced down other spending, cooling the economy.

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The last proper rate-hiking cycle in the UK was over fifteen years ago.

Back then, the UK mortgage market still overwhelmingly consisted of variable rate mortgages tied at the hip to changes in Bank Rate. So when Bank Rate rose from 4.5 per cent to 5.75 per cent, mortgage rates rose from 5.2 per cent to 6.1 per cent. Almost everyone with a mortgage got squeezed, and squeezed in pretty much real time.