(Bloomberg) -- The Bank of England just raised its benchmark U.K. interest rate for the first time since July 5, 2007, raising the cost of borrowing for British banks and potentially increasing the cost of mortgage payments for millions of homeowners.
Here’s a look at what the world was like the last time rates went up.
1) The iPhone was less than a week old
The original iPhone, Steve Jobs’s game-changing handset, went on sale just six days before the bank’s Monetary Policy Committee decided to hike interest rates to 5.75 percent. The phone was announced in January 2007 and went on sale in the U.S. on June 29 priced at $499. It took several more months to reach British consumers, debuting in U.K. stores on Nov. 9 at a cost of £269. The world had already started to change by the time Britons got their hands on the iPhone. The credit crunch had begun and the Bank of England was on the verge of cutting rates—the start of a steep decline from the July high to a record low of 0.5 percent just 18 months later. In the years since 2007, Apple has sold 1.2 billion iPhones and is widely credited with changing the way we use technology in our daily lives.
2) George W. Bush was president of the United States
Before Donald Trump, there was Barack Obama. Before Barack Obama came George W. Bush. Remember when he was in office? We don’t need to look too far back into history to realize how much changed. Bush was coming to the end of his second term, an eight-year period marked by 9/11, the Iraq war, Guantanamo Bay, Hurricane Katrina and the financial market meltdown. These days, Bush is an outspoken defender of democratic norms and civil discourse, as well as a keen artist.
3) Gordon Brown was prime minister of the United Kingdom
Brown is remembered in Britain mainly as the man who craved power for more than a decade before bungling things spectacularly when he eventually reached the top. Before becoming prime minister, the tenacious Scotsman for years harried his predecessor, Tony Blair, to step aside. Brown’s credibility evaporated when he chose not to trigger an election. (By comparison, Theresa May’s credibility was shot when she called a vote she didn’t need to.) Brown then watched the Bank of England cut rates again and again and again during 2008-09, won praise for his reaction to the Lehman Brothers collapse in September 2008 and was voted out of office by an angry electorate in May 2010.
4) The Bank of England didn’t announce rate increases on Twitter
The Bank of England wasn’t even on twttr, as founders Jack Dorsey and Biz Stone had styled their new service when it launched in 2006. The bank’s official account says it was created in January 2009, just beating President Trump’s timestamp of March 2009. The bank’s first tweets were suitably august.
Meanwhile, over on the other social network, Facebook in 2007 surpassed 50 million users. (It’s at more than two billion now.)
5) The average price of a home in London was £261,000
London’s housing market dipped during the financial crisis but recovered strongly, outpacing the rest of the U.K. and enjoying an unprecedented boom. Back in July 2007, with mortgage rates pegged to the BOE base rate of 5.75 percent, the average price of a London property was £261,192, according to a Bloomberg analysis of U.K. Land Registry data. Today that same measure stands at £470,632. With inflation today running at 3 percent, and wage growth sluggish at best in the U.K., the mortgage required to buy an average home has put ownership out of reach for many. Even then with interest rates much higher than today, buying a home was a more achievable goal. Check out how home prices compare across London.
6) Mervyn King was the governor of the Bank of England
Today the Bank is helmed by Mark Carney, a suave, tanned Canadian with a penchant for predictions that sometimes don’t come true. Back in 2007, the BOE governor was a very different chap. Mervyn King, a grammar-school boy educated at Cambridge and Harvard, spent 13 years at the Bank before becoming governor.
©2017 Bloomberg L.P.