Chinese growth leads to higher mortgage rates

Data released yesterday in China showing economic growth surging back to new high levels means that the Reserve Bank of Australia is more likely to raise interest rates.

''It was a very strong quarter and growth [in China] could be around 13% on an annualised basis," said Stephen Joske at the Economist Intelligence Unit in Beijing.

Chinese demand for construction materials has caused iron ore and coal spot prices to surge.

Chris Richardson, a director of Access Economics, said it was plausible that iron ore and coal contract prices could rise as much as 30 per cent this year.

"If the glory days come back, then the short-term pay off could provide up to $27 billion in extra national income [for Australia], and it could arrive fast," he said.