The growing mortgage crisis is popping up in unexpected places. It is widely known – although wilfully ignored in the establishment media – that some 1.4 million mortgages are currently rolling over from an interest rate of around 1.5% to one closer to 6.0%, and that this is set to leave more than a million households in arrears in the first half of 2024. For the most part, this was expected to be a problem among first-time buyers at the lower end of the housing market, who took advantage of low interest rates and government support schemes to get onto the housing ladder. But it turns out that even more affluent people made rash decisions based on emergency interest rates during the pandemic. One such being the now former Minister of State for Science, Research and Innovation, George Freeman, who has resigned claiming that his £118,300 ministerial salary doesn’t cover his monthly mortgage payments, which have risen from £800 to £2,000 per month.
One might even feel a little sympathy insofar as his plight is being repeated across the UK at present… that is, until one remembers that he is part of a government that routinely denies child support to families who become unemployed on the grounds that “they should have thought about that before they had children.” So no, maybe Freeman should have thought about the probability that his government would mess up the economy, making what might have seemed an affordable house purchase in 2020 completely unaffordable in 2024. In any case, it turns out that a former minister’s ability to secure second, third, and even fourth jobs and sinecures with lobby companies is such that Freeman will be better off as an ordinary MP – an option which won’t, of course, be available to the thousands of people facing eviction and homelessness as a consequence of higher interest rates.
Of more interest perhaps, is the manner in which the BBC has covered the story. The same BBC which will happily repeat ministerial attacks on homeless people and those receiving welfare payments – mostly the working poor these days – is suddenly sympathetic to the idea that an £86,584 (plus expenses) MPs salary – which falls within the top five percent of incomes in the UK – is not high enough to attract the talent required. This, of course, will be news to the 2019 “Red Wall” intake of MPs who had previously met a wage bill or worked on the shop floor, who were more than happy to stand for election… giving the lie to the idea that an MP salary – which comes with expenses to cover housing and utilities in London along with free workplace parking and exceptionally cheap subsidized food and drink. Indeed, the unspoken sub-text here seems to be that we – the BBC’s senior managers – need higher MP salaries so that more people like us can enter parliament without taking a hit to our upper-class lifestyles. Indeed, were it not for the highly discriminatory selection processes adopted by the uniparty – and in the absence of a populist alternative and/or a fair electoral system – one suspects that we would see a long queue of ordinary working people volunteering to endure the hardship of life on £86,548-a-year so as to represent their local area… and likely do a much better job than the current crop of gobshites.
Also telling – in an election year – is the BBC’s explanation of why George Freeman’s mortgage is suddenly so expensive. Even before SARS-CoV-2 arrived in the UK, Copernican economists – myself included – were warning of the economic damage which would follow any widespread attempt to quarantine the population. But I suspect that even these minority voices were shocked by the extent of currency creation and government misspending which occurred during the two years of lockdown. So that, all too predictably, when the pent-up savings of households under house arrest crashed into the shattered supply chains of international lockdowns and business closures, giant spikes in prices became inevitable. And while the best cure for these high prices was high prices, it was also inevitable that the central banks would attempt to apply the failed 1970s response of higher interest rates despite the situation being entirely different.
It goes without saying that the self-sanctioning of energy and raw materials from Russia made a bad situation far worse, since these further increased prices across the economy. Indeed, and despite the official figures, UK businesses and households are paying more for electricity and gas than they did last winter.
It should be remembered that the establishment media in general, and the BBC in particular, were cheerleaders for both lockdowns and sanctions on Russia… the economic consequences of which are only now becoming apparent. But anyone expecting a degree of mea culpa will be sadly disappointed. Because it turns out that in establishment media land, there is no war in Ukraine and lockdowns are a figment of conspiracy theorists’ imagination. No, there is but one official explanation for the unfolding crisis:
“Many homeowners are facing steep increases in monthly mortgage payments as they come off fixed-rate deals.
“It comes after mortgage rates soared and the value of the pound tumbled in the wake of Liz Truss’s mini-Budget in September 2022.”
Once again, the subtext owes much to the impending election. With the Tories 30 points behind Labour in the polls, and with Reform UK snapping at their heels in the red wall seats, Tory strategists have given up hope of remaining in government and have shifted to damage limitation. And the last thing Rishi Sunak wants anyone to draw attention to is that he was Chancellor when all of that funny money was created during lockdown, and that he was a key figure in the decision to disrupt supply chains and to impose energy and resource sanctions on the UK economy. Far better to attempt to blame Dagenham Liz – whose economic policies were no less deranged, but whose ability to do damage was quickly curtailed – for a UK economic crisis which is only in its early stages.
The only surprising omission from the BBC line was Brexit – which, presumably couldn’t be shoehorned in just now without having to mention lockdowns and sanctions… and because, also as a result of these, Paris and Berlin are in open revolt, and the European economy is in a worse state than the UK’s.
As you made it to the end…
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