Homeowners Down Under are bracing themselves for a record rate rise at the end of the year…

The RBA held at 7.25 per cent for the third consecutive month this week, but after this recent stronger-than-expected growth figures, another interest rate rise to 7.5 per cent towards the end of the year is firmly on the Reserve Bank of Australia’s radar.

According to figures from the Australian Bureau of Statistics, gross domestic product grew 0.6 per cent in March - double the figure that economists had been forecasting.

Ten out of 17 industry sectors reported growth of 1 per cent or more in the quarter, pushing the annual GDP rate to 3.6 per cent.

Rate rise inevitable?

Commonwealth Bank economist John Peters commented: “Growth is down from last year's cracking pace of 4 per cent-plus, but the slowing trajectory will not be enough to stop interest rates going up again, most likely in August or September.

“A massive inflow of $30 billion to $40 billion from the commodity price increases over the next few months, added to the Budget tax cuts and the recovery of the farming sector, will outweigh higher interest rates and petrol prices. This all combines to boost the risks of another interest rate rise”.

NAB senior economist Jeff Oughton added: "The full effects of the interest rate tightenings in November, February and March have yet to flow through the economy.

"There is an order of things - first you put up interest rates, then the economy slows and finally inflation comes down - and that is the progression we are in the midst of”.