Barefoot Investor Scott Pape reveals why you need to sell your home right now

Barefoot investor Scott Pape has some brutal advice for those struggling with mortgage stress: they might have to sell their house.

The financial guru echoed Reserve Bank Governor Michele Bullock’s warning that “the small number of borrowers who cannot make ends meet” “will eventually have to make the difficult decision to sell their homes”.

Mr Pape expected interest rates to remain “consistently higher” than they have been in recent years as the Reserve Bank “focuses on eliminating… persistent inflation”.

The cash rate currently stands at 4.35 percent, the level it has been since November last year.

“Too many people (and journalists!) have based their expectations on extremely low interest rates,” he wrote in his column for News Ltd.

‘It is high time that we weigh anchor and sail into the sea of ​​persistently higher rates.’

According to Pape, given the high interest rates in his area, some people simply cannot afford the mortgage they have taken out.

“If I had a dollar for every time I told people in financial need to consider selling their homes, I could rent a house in Ouyen (for a week),” he wrote.

When Mr Pape supported the Reserve Bank, he lashed out at Finance Minister Jim Chalmers.

“In recent weeks the Chancellor of the Exchequer has been somewhat embarrassing to the Reserve Bank by whining that they are ‘ruining the economy’ by their decision not to cut rates,” Pape wrote.

Mr Pape pointed out that the United States, the United Kingdom and New Zealand had all raised interest rates higher than Australia, even though it had consequences for their economies.

He compared the Reserve Bank’s actions to those of a doctor removing “a cancerous melanoma” in the form of inflation, even though he agreed with Dr Chalmers that interest rates were damaging the economy.

But just as a doctor removes a melanoma, the temporary pain of higher percentages serves a greater purpose. For example, Ms. Bullock had done the “daring thing” by admitting how much pain it would cause.

However, political ‘spin doctor’ Dr Chalmers could make no such concession, especially with the elections approaching, Pape said.

He advised people who were experiencing “palpitations” at the thought of continued higher rates that it was time to get a “financial check-up”.

In his environment of higher interest rates, Mr. Pape said, some people simply couldn’t afford the mortgages they had taken out

Earlier this month, Ms. Bullock said a rate cut was unlikely in the next six months.

“I understand this is not what people want to hear,” she told reporters.

‘I know there are a lot of households and small businesses out there struggling with the interest rates they are at now – a lot of people are struggling and we are very aware of that.

“We can’t just let inflation happen. It’s bad for everyone, and especially for people on lower incomes. That’s why we have to continue to reduce inflation.”