Homebuying weak at the end of 2009

Home loan applications fell dramatically in December as Aussies shied away from buying property at the end of last year.

The mortgage broker Australian Finance Group (AFG) found that there was a 21.2 per cent fall in applications for new home loans in December, the Australian reported.

AFG general manager Mark Hewitt said that official home loan interest rate hikes last year had prompted the reluctance to buy.

"Three rate rises in a row was overkill for a vulnerable market and the latest figures confirm our fear," he told the newspaper.

Mr Hewitt added that the winding down of the first-home buyers’ grant had contributed to the reduction in house sales. AFG figures show that first-home buyers accounted for only 13.1 per cent of new loan applications in December, compared to nine months previously when they were at 28.1 per cent.

When speaking recently to the Australian Associated Press, Lisa Montgomery, head of consumer advocacy at Resi Mortgage Corporation, said that bank customers should compare home loans and consider refinancing in light of further predicted rate rises this year.

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