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Financial advice author Scott Pape has likened borrower fears about interest rate rises to ‘wimpy’ children screaming at a Band-Aid being ripped off.
The ‘Barefoot Investor’ weighed into expectations the Reserve Bank of Australia will raise the cash rate four more times by Christmas to restrain soaring inflation.
‘Look, I’m not saying there isn’t genuine hurt out there. As a financial counsellor, I know, he said.
‘What’s really happening is that the Reserve Bank is ever-so-gently peeling off the easy-money Band-Aid — and the media is like a wimpy kid screaming with every millimetre: “It hurts!”.’
The 0.85 per cent cash rate is well below the 17.5 per cent level of January 1990, but the predicted RBA increases for 2022 would still be the steepest since 1994.

Financial advice author Scott Pape has controversially likened borrower fears about interest rate rises to children screaming at a Band-Aid being ripped off
The Commonwealth Bank, Australia’s biggest home lender, expects the RBA to raise rates four more times by Christmas.
It expects another 0.5 percentage point increase in July, the same as this month’s half a percentage point rise that was the biggest monthly surge since February 2000.
This would be followed by 0.25 percentage point rises in August, September and November – taking the cash rate to 2.1 per cent – the greatest since May 2015.
CBA had previously expected the RBA cash rate to hit 1.6 per cent this year.
Should the Commonwealth new predictions come true, a borrower with an average $600,000 mortgage would have their monthly repayments jump by $582, from $2,384 to $2,966.
That would be a 24.5 per cent increase as a popular variable mortgage rate rose from an existing 2.54 per cent to 4.29 per cent.
The Commonwealth Bank’s variable rates aren’t rising until June 17, to reflect the RBA cash rate this month increasing from 0.35 per cent to 0.85 per cent.

The Commonwealth Bank, Australia’s biggest home lender, is now expecting the RBA to raise rates four more times by Christmas
Despite the big surge in monthly mortgage repayments, Pape accused the media of stirring up fear.
‘Yet this obsession the media has with catastrophising every rate rise is just ridiculous,’ he said.
In Sydney, where the median house price is $1.4 million, borrowers who bought a home recently would face significant budget pressures.
Four more RBA rate rises, with the June increase, would increase repayments for owners borrowing $1 million by $970 a month, from $3,973 to $4,943.
For all the pain on the way, Pape likened interest rate worries to his son copping a tennis racquet to his face only for the shock to be worse than the injury.
‘Earlier in the afternoon there was also some blood spilt… when the Reserve Bank ‘shocked the market’ with its biggest hike in 22 years, lifting rates a full half of one per cent,’ he said.
‘In the news game, if it bleeds it leads, and this was a double gusher!’
No relief is in sight for borrowers with the Commonwealth Bank expecting inflation to hit 6.25 per cent later this year, which would be the fastest annual pace since the December quarter of 1990 when the Gulf War pushed up petrol prices.

Despite the big surge in monthly mortgage repayments, Pape accused the media of stirring up fear (pictured is a stock image of a Band-Aid to illustrate his point about rate rises)
The March quarter’s 5.1 per cent increase was already the steepest since 2001, a year after the GST was introduced.
The era of the record-low 0.1 per cent cash rate ended in May with a 0.25 percentage point RBA rate rise, the first since November 2010.
RBA rate rises in May and June have taken the cash rate to 0.85 per cent, the highest since October 2019 which has undone the emergency cuts of 2020 to compensate for the lockdowns.
Commonwealth Bank senior economist Belinda Allen said the bank’s credit card customers were already cutting back on their spending on clothing, furniture and going out to cope with rising interest rates.
‘Higher prices and rising interest rates will impact household spending,’ she said.
‘The RBA rate hiking cycle is more aggressive than earlier expected.’
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