Eli5: why are interest rates now considered worse than higher interest rates of decades ago?

Question

I am surrounded by boomers saying this that in their day interest rates were at 15% and we have it easy! I’m also surrounded by the younger generations saying this is ‘not the same thing’

Explain to me the reasoning…

In: 233

Answer 1

Already answered. Prices have gone 10x whilst your income has only gone up 5x. High prices mean bigger loans, so a 5% rate is infact a 10% “real” rate if the loan you have to take is now doubled. And 20% “real” rate if your income is half of what it should be if inflation adjusted.