Australia's record low interest rates won’t last much longer: bankers

Homeowners should prepare for a one percent rise in mortgage rates over the coming year, the Commonwealth Bank's chief economist has warned.

The grim warning comes as the Reserve Bank once again kept the cash rate at a record low of 2.5 percent.

Rates have been on hold for 14 months, but economists, including Commonwealth Bank's Michael Blythe, believe rates will rise in the near future.

If correct, the one percent increase would add almost $300 a month to a $500,000 mortgage.

Interest rate comparison website Canstar's Mitchell Watson has reminded homeowners not all lenders are offering the same rates.

"On a variable rate you can be getting a rate as low as 4.6 percent and on a two-year fixed as low as 4.3 percent," he said.

The key to the rate rise will be the unemployment rate, most economists agree.

If the unemployment rate keeps rising, it is likely there will be a delay in the RBA's first rate increase.

On the other hand, if current low interest rates see the unemployment rate improve from its current 6.1 percent, then the likelihood is that rates will start rising more quickly.

The September unemployment rate is due to be released by the Australian Bureau of Statistics on Thursday.