Homeowners are still waiting to see what effect the Reserve Bank's official cash rate rise will have on mortgage repayments. (Ian Waldie/Getty Images)
The 25-basis-point official increase should mean that borrowers with an average $300,000 mortgage pay around an extra $46 per month, but the major banks say they are still reviewing their standard variable rates.
Federal Treasurer Wayne Swan reiterated on Wednesday that he expected the banks not to pass on any more than the official increase, which took the cash rate to 3.25 per cent.
"I've made it very clear the government expects the banks to behave in the way in which they should behave and the way in which they've traditionally behaved," Mr Swan told reporters in Brisbane on Wednesday.
"That is, that they will pass on the official cash rate increase and no more."
The big four - ANZ, Commonwealth Bank, National Australia Bank and Westpac - account for 85 per cent of home loans in Australia.
Business groups continued to argue that the RBA's rate rise was premature, while Opposition Leader Malcolm Turnbull said it strengthened the case for winding back the government's economic stimulus as fiscal policy was now working against monetary policy.
"We have Wayne Swan saying the Paris Hilton spending from the Rudd government has to continue with renewed energy," Mr Turnbull told reporters in Melbourne.
New data released on Wednesday showed that demand for mortgages from first-time buyers was already waning in August, well before the first official rate rise in 19 months and the winding back of the government's more generous housing grant at the start of October.
First home buyers accounted for 24.7 per cent of the 62,718 owner-occupier loans granted in August, a further easing from the record 28.5 per cent in May.
"We suspect that the RBA will be pleased to see an easing in appetite for housing finance, particularly from first home buyers," RBC Capital Markets senior economist Su-Lin Ong said.
Still, that is unlikely to stop the central bank from raising the cash rate at least once more before the end of the year, economists say.
Overall, loans to owner-occupiers declined by 0.6 per cent in August. The dip followed a downwardly revised 2.2 per cent fall in July, which ended nine straight months of growth.
However, a breakdown of the data showed the August decline centred on a drop in refinancing and mortgages for purchases of existing homes, offsetting an increase in loans for the construction and purchase of new homes.
Strong home building demand helped the Australian Industry Group/Housing Industry Association (HIA) construction index rise 8.4 points to 50.8 in September - pushing above the 50-point mark that separates expansion from contraction for the first time since February 2008.
But HIA senior economist Ben Phillips said rising interest rates and the paring back of the first home owners grant for new properties to $14,000 from $21,000 threatened to reverse "this welcome trend".
Still, real estate group Ray White said the housing market could bear a couple of rate rises.
"The confidence in the economy and the real estate market will override any concerns about where rates are headed," its joint chairman Brian White said.
