Nostalgia isn’t what it used to be, as they say, and in an era of creeping inflation, job insecurity and the higher taxes, it’s tempting to look back and reminisce about buying a five-bedroom Georgian house in Hammersmith for £2,000, as a friend of mine did during the 1960s.

Earnings were proportionately lower then so by comparison that’s the same as a salary/mortgage ratio of three to 3.5 times salary today.

But since HSBC a few days ago said it would lend at 6.5 times salary there has been a collective clutching of pearls at the thought of such lending profligacy.

The 2008 financial crash lingers in the market’s collective memory and at first sight, the HSBC offer looks reckless and foolhardy. Worse, it resembles a typical bull market stunt that happens before a crash

But it’s worth digging below the surface to see if the devil is in the detail.

In days gone by building societies, based affordability on one income, which was almost always that of the husband.

The typical rule was up to three or 3.5 times the main (male) earner’s income, or sometimes 2.5× the main income plus 1× the secondary income.

The man was assumed to be the primary, full-time earner and there were fewer multi-income households, compared to the 21.71million quoted by the Office of National Statistics today.

Of course, women have since entered the workforce en masse and their careers tended to be in civil service jobs such as teaching and anything ‘self-employed’ was badly paid and inconsistent.

Two world wars changed women’s employment status forever, as they became engineers, mechanics and munitions operatives. Girl power is not only winning the income race but overtaking the boys in terms of earning power. The so-called gender ‘pay gap’ that we heard about for years is now in reverse.

Although median wages still show a small ‘gender pay gap’ between men and women per hour of full-time work, The Telegraph recently reported that women are beating men to £100k salaries before the age of 30.

Maggie moment

But it all began earlier than that. During the late 1980s lenders started accepting both incomes in full. Then came the buoyant optimism of Thatcherism, where we shook off the grim 1970s ‘winters of discontent’ and the embarrassing IMF bailout.

The dream of property ownership was embraced by millions, thanks to Maggie’s property-owning democracy. The resultant ‘boom’ saw prices rise much faster than wages, so two salaries were needed, especially as interest rates topped out at between ten and 15%.

So, by the 2000s ‘five times salary’ was shorthand for combined household income. Lenders had to factor in two incomes to the whole mortgage equation.

What that means in real terms is that if a household now earns, say, £50,000 each (£100,000 combined), under the previous system of the 1980s: 3.5 × £50,000 = £175,000. Today, the figures would be 6.5 × £100,000 = £650,000.

At first glance that’s nearly four times higher borrowing capacity. But taking into account the previous arguments, it’s only about double if you compare per earner:

• £650,000 / 2 = £325,000 per person
• £325,000 ÷ £100,000 (combined) = 3.25× per person

Today’s 6.5× joint income roughly equates to 3.25× each individual’s salary, which is almost identical to the old ‘3.5× ‘main earner’ rule. Sometimes, the more things change in the housing market, the more they stay the same.

At heart, lenders are a prudent bunch and are adjusting to the winds of social change that have swept the landscape, rather than lumping all the risk on one person.

Trevor Abrahmsohn is CEO Glentree International