AUSTRALIA’s 49-year low interest rates may come to an end as early as next month, according to several leading economists. 

While home owners celebrated the Reserve Bank’s decision last week to leave interest rates unchanged at 3 per cent, better than expected economic figures have increased the chances of rates being lifted by 25 basis points at the board’s October meeting. 

Australia’s economy reported modest growth in the June quarter, growing 0.6 per cent to come in ahead of the expected 0.2 per cent growth. 

The positive result now means the economy has recorded two quarters of positive growth, after a contraction in the December quarter of 2008. 

The interbank financial markets suggest the official cash rate could be 178 basis points higher by September next year, implying more than seven rate hikes of 25 basis points each. 

Economists at JPMorgan and NAB have already brought forward their calls and have forecast the RBA will implement two rates rises by the end of the year. 

ReMax Excellence agents Rohan Banning and Lyn Griffiths said the potential for several rate rises was a bitter sweet result for home owners and buyers.  

“Economists have only made predictions of interest rates rises because the Australian economy is gaining strength,” Mr Banning said. 

“While no home owner wants to pay higher interest rates, they can gain some confidence from the fact that rising interest rates often precede a run of growth for house prices. 

“This is causing a lot of people to jump into the property market now, while it is perceived to be at the beginning of a new growth cycle.”  

Ms Griffiths said even if interest rates were to rise twice this year, home owners would still enjoy some of the lowest repayment rates in years. 

“What’s important is that people really look at the broader outlook for Australia’s economy and spend a lot of time talking to their lenders about how they could manage a loan over the long run,” Ms Griffiths said. 

“Speculation of any further rate cuts has been put to bed, which suggests that it will never be more affordable to enter the market than now. 

“But with Townsville’s employment and population growth figures still holding strong, coupled with a national housing shortage, there are many reasons why owning a home can be a successful investment over the medium to long term regardless of interest rate activity.”