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At 18% interest which happened in the 70s your yearly payments would have been 14468.02 or 36% of your income. A couple years ago you could get 3% rates and so your payment on that house would be 40473.98 or 40% of your income, not much difference (and likely the house is larger). At todays 6% interest the payment is 57556.85 or 57% of your income and so not affordable, but this is a very recent thing.

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This is both ignoring inflation, and the potential to shorten the duration of the loan.

Inflation is a factor in a few years but never today. Now inithe 1970s high inflation meant that a house you can barely afford becomes a small part of the budget in a couple years while the small inflation of today means a house you can barely afford today is still a big part of the budget in 5 years - but that is not a consideration of today.

It absolutely is a massive factor; because people plan a few years ahead. Consider how much it changes what you can afford if you save one year worth of payments in each case.

There is also less need to get the maximum possible loan if house prices are lower as a ratio to income.

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