As a result of the combination of higher-than-before interest rates and the expiry of the Government's plan to help first time homeowners by proving them with a grant, the housing finance in January managed to record a huge fall.

As has been revealed by the numbers shared by the Australian Bureau of Statistics, the number of people picking up owner-occupier home loans, over the month of January, declined by 7.9% to a little over 51,000.

The market estimates had actual been expecting a hike of 2%, and even the most pessimistic of economists had predicted a fall of only 5.5%.

The latest figures have revealed that the number of first homebuyers as a percentage of the total owner-occupier borrower also managed to fall by a small margin in January, as compared to the previous month.

"The removal of the Federal Government's first home buyer boost and increasing interest rates have clearly lowered activity in both the new and existing homes market," he noted in response to the figures. The Reserve Bank must take stock of the impact that higher interest rates are having on the new homes market. Aggressive interest rate increases will ultimately constrain new housing and push up prices for both home purchase and renters", said Housing Industry Association's Senior Economist, Ben Phillips said.