Hey guys, it's Sasha The UK is running out of money. We are staring at a catastrophe where millions of people are on the verge of financial destruction and the dweebs in the UK government are doing exactly nothing about it. The situation is dire beyond words and I do not understand how the Prime Minister and the Chancellor are sitting around twiddling their thumbs. New data from the Bank of England has shown that households had to take out 3.8 billion pounds from their savings just to pay the bills in May.

This is the biggest withdrawal of savings in recorded history, and it's not surprising that this is happening. A few days ago, the Bank of England increased interest rates to five percent to try and Tackle inflation that is currently sitting in 8.7 percent. The Bank of England created this inflation in the first place by printing insane amounts of money while the government was supplementing it busy destroying the economy with lockdowns and handing out billions of pounds to their mates during the Covet crisis. And now after printing all of that insane amount of money, inflation has finally turned up surprise surprise.

and it is you who has to pay for it. Annual inflation for food and non-alcoholic beverages sat at 18.4 percent for the month of May and the price of ingredients for a traditional English breakfast spiked 22 percent to a record high of 36 pounds. UK wages haven't kept up with inflation in the same way that Americans pay has. and Professor Morton Raven told the Daily Upside that U.S workers changing jobs more often could be the reason why and of course you would know all this if you subscribe to the Daily Upside who are the sponsors of today's video.

The Daily Upside is a 100 free, completely free daily newsletter which gives you a summary of the most important news from the world of Finance once a day. It's written by industry professionals, there is zero fluff, and the News comes with a very appropriate amount of sarcasm, which I personally very much appreciate. I Have been signed up for a long time now and there is a very good reason why the Daily Upsider gone from a hundred thousand to one million subscribers in the last 18 months. You can read everything you need to know over a morning cup of coffee and signing up is free and takes 10 seconds.

Go to my link in the description or in the pinned comment and type in your email address and that's it. That's all you have to do and you will get that one daily newsletter every morning. I Very highly recommend the Day The Upside: Please go and sign up through my link below. Energy Prices are falling today because the energy price cap has just reduced to 2074 pounds a year for the average household which is still more than double the price before Russia's invasion of Ukraine and before the inflation.

Spike Centrica boss warns that energy bills will stay high for the foreseeable future. Centrica, by the way, is the parent company Of British Gas. They are the guys who posted a record profit of 3.3 billion in their most recent accounts for 2022, which was three times higher than in the previous year. And on the back of those record breaking profits, Centrica's board of directors has started paying out dividends to their shareholders.

Well, isn't that nice? Of course, tripling your profits and paying them out as dividends to your shareholders has absolutely nothing to do with why Energy prices are through the roof and why the CEO is saying that they'll continue staying High Even though gas prices have fallen drastically this year, oil prices down and wholesale electricity prices have been very low since. January A few days ago, a new Cost of Living study was published by the Joseph Roundtree Foundation. In that study, 2.3 million households in the UK have recently borrowed money or used credit cards to pay for basic bills and twice as many 4.5 million households. Just think about that number and our behind on payments for at least one of their credit cards or some other.

Bill Those numbers are insane. It's Bonkers Most mortgages in the UK have a fixed rate period. For a period of two to five years is after which you either have to start paying the variable rate or remortgage. The banks really like this system because every time you remortgage which is way too frequently, they get to go and collect their fees for giving you a new mortgage even though you keep living in the same house and exactly nothing happens.

18 months ago, the interest rate in the UK was just above zero percent, and depending on your loan to value, you could get a fixed rate mortgage of between one and one and a half percent. Back then, in some cases, maybe a little bit higher. today, the average mortgage rate has gone over six percent and climbing according to Nationwide. Mortgage applications are steady and have not declined, and Nationwide has also said that house prices have gone up 0.1 percent in June and all the newspapers are reporting on this news story because you know everything is okay.

Don't you worry? No, please don't worry. No. seriously, it's okay. The value of your house is going up.

Yeah, But remember that Nationwide has a massive bias towards pretending that the housing market is okay because that is literally how they make their money. If you look at the actual bank of England data numbers right, the number of new house purchases has collapsed in the last nine months, and the number of people remortgaging has also Fallen. It will also be the case, although we don't have the precise data on this, but when this sort of situation happens, it tends to be that people on Lower incomes that cannot afford to buy while people on higher incomes have more flexibility. so a lot of the sales are going to be weighted disproportionately towards people in higher incomes? So the fact that the house prices are staying consistent? Can it well be down to the fact that the distribution of which houses are being sold is changing now? The number of people remortgaging has also fallen and the total value of mortgages being given out the orange line on this chart is falling sharply at the same time.

There is a silent killer that I haven't actually heard anyone in the media mention at all because 15 years ago it was pretty much unheard of for a credit card company. The UK for a credit card to be linked to the bank of England base rate. That's not what happened when you had a credit card. you got an interest rate and it was fixed.

It was something specific, like 17.9 percent or whatever. The standard rate. Okay, some people got an introductory deal, but the standard rate. If the credit card company was ever to increase your interest rate, they would legally have to give you the option to reject it because that's the law and pay down your balance at the old rate.

But in the last few years as it became obvious that inflation is a big problem and it is brewing and it is coming with the government printing huge amounts of money, the guys working for the banks are not dumb. So many of the credit card companies in the UK have changed the terms and conditions and links to the interest rate on credit cards to the base rate. You might have noticed this on one or two of your credit cards in the last few years because when the rate was sitting at zero percent, there was only one way that it was going to go and that's up. and when the rate goes up, they can start charging you more interest.

Of course, none of these companies linked to the interest rate to the base rate when the base rate was high because this is a stealth profiteering tactic by the greedy Fox that implemented it. So now people who are having to borrow on their credit card to pay for their food, pay for the electricity bills, are also getting monthly increases in the interest that they have to pay on the credit card and they have no option to turn that increase down. They have no choice where the is the FCA This is clear circumvention of the rules. It is within the rules, but this is clearly taking the piss.

They are putting these increases in place, hitting people at the peak of the Cost of Living crisis and they're greedy. As research by the National Institute of Economic and Social Research says the 1.2 million families are going to be insolvent by the end of this year, where in the second half of this year as of today, that's four percent of all UK households and the proportion is higher in places like Wales in the Northeast This is because the increase in mortgage costs, rent, food prices, and energy prices are making it impossible to make ends meet because wages are growing nowhere near and as fast and these are just the households that are going insolvent. There will be many, many more households that will get really close to the line but not quite go over it. I Know that a bunch of Boomers with chicken brains are going to come to watch this video and write comments saying hey, it's your fault if you can't afford five percent interest rates because back in my day they paid 18 or whatever and you suck because you bought a house that you can't afford, it's all your fault I Got hundreds of those comments on my last video.

So I know for sure that they're coming again now before Margaret Thatcher's right to buy house prices were relatively cheap compared to people's wages. Even after that policy came in play, there was still relatively a lot cheaper than they are today. today. many found companies take out mortgages on multiples of something like three and a half four times their combined salaries.

While in 1970s, the multiple was more like one to two times if you look outside. London That multiple was very low. The proportion of take-home pay that went towards paying for your mortgage was significantly lower. This is important today, that number is about 33 on average and it's a lot higher in the Southeast.

So an increase to your mortgage payment today is significantly harder hitting on your budget. I Know it's really hard to understand. The biggest issue is the relative increase. I Know there's a lot of people who are mathematically challenged among the people who write these kind of comments, but if your interest rate increases from zero percent to six percent, that is actually a much much worse increase than going from something like seven or eight percent up to eighteen percent.

Even if the absolute increase of 10 is higher, the relative impact on your monthly payment when you start from zero is much worse. This is why everyone whose fixed term is coming to an end in the next 12 to 24 months will see their monthly payments increase by something like 70. And no. Banks do do their due diligence.

They do do affordability checks, but not any. Bank Ever in the last 15 20 50 years will go and do a stress test where they go and assess you for having to pay 70 or 100 more for your mortgage at any point during the next two to five years. So the monthly spend on your mortgage we'll go from 33 of your about Budget on average to more like 56 of the average household budget. After you add food, electricity, transport, a large number of UK households will already not have the money to pay for all of these things.

They will be insolvent and we are seeing the start of this catastrophe unfold. In the savings data that I showed at the beginning of the video, Households are beginning to deplete their savings at incredibly fast rates. You can see how fast that chart is dropping to make ends meet. Data from the Office of National Statistics says that the average adult in the UK had 6757 pounds in Savings in 2020.

that is not going to last very long. 40 percent of under 30s have no savings at all. And what is the government's recommendation on all of this? Well, Origi Sunak and Jeremy Hunt have come up with a master plan. If you can't afford your mortgage because your monthly payment has just gone up by 70, you can ask Key Bank to pay interest only I'm not actually joking.

This is actually a solution that these numbnuts have put in place. This will still be a lot more than you used to pay, but it means you won't actually pay any of your mortgage back in terms of the principal. According to Jeremy Hunt the UK Chancellor who has never worked a day of his life in finance, This is going to help people financially. According to the Guardian interest only mortgages are a godsend for UK borrowers.

This has all been portrayed as a good thing. except this is not a good thing and it is not a solution at all. This is disgusting because you don't actually repay your mortgage on an interest-only deal. This is so incredibly up.

I Just can't believe that the media is sucking this up and selling the government narrative as some kind of a positive. People are struggling to make ends meet because they got by the government's incompetence and complete dereliction of Duty the government one was too busy electing a new prime minister every three days instead of actually doing their job. And the official solution that these Tweedle dumbs have come up with is this: if you are in a crisis. If your family is in a crisis because you cannot afford to pay your bills and you're getting into debt now, you're destroying your savings.

You're borrowing a lot more on credit cards just to make ends meet, why don't you get into even more debt by not paying back your mortgage? This is actually the solution put forward by the government. They literally published this yesterday. It's called the Mortgage Charter Following our meetings in December and June the principal mortgage lenders have agreed to set out here the commitments they make to their regulated: Residential Mortgage Borrowers These measures should offer Comfort To those who are anxious about high interest rates and support to those who do get into difficulty. Well, me, what is this magic solution? There is one thing that, uh, looks kind of helpful on the surface here.

at the end of your fixed time mortgage, you should now be able to get a new mortgage deal without the need for for an affordability check. It doesn't quite say what kind of deal that's going to be or whether it's going to be in any way competitive, but you will be able to get a deal. but these new deals are still going to be 70 percent more expensive per month to the average household budget. So this will not solve affordability in any meaningful way.

This is not gonna solve the problem of people not having the money to pay that thing and this: Charter says that you can switch to paying interest only for six months or extend the term of your mortgage if you do need to reduce your monthly payments. But both of these things are not Solutions. Both of these things are really bad for you because you end up taking much longer to pay a mortgage and pay shitloads extra in interest. This is a bad thing.

The only winner here is the bank. Over the next few months, the situation is going to get a lot worse because you can see that nobody has any idea of what to actually do to actually help people. The Bank of England will be forced to to increase rates further because inflation in the UK is Rife. The government is sitting around doing exactly all so that no fiscal policy is being implemented to support the monetary policy that the bank of England is being forced into implementing.

These are not just numbers, these are not just statistics and millions of actual people in this country, real families with children are going to be in deep and the rich wankers sitting in government could not care less because they have no idea how to solve this. They put everyone into this mess and now they're sitting around pretending like this is not happening. The guy who literally created this problem when he was Chancellor has now been promoted to prime minister with nobody not even the other members of his own party voting for him. It's disgusting because this absolutely did not have to happen.

But here we are.