The number of mortgages being taken out in Australia has fallen to a five- year low, after the central bank increased lending rates and house prices climbed, according to Australian Finance Group Ltd (AFG).

The company saw a -19% drop in the number of mortgages arranged in January 2010 by its brokers in comparison with January 2009 and this was the lowest number since 2005.

Brett McKeon, AFG’s managing director, said: “The impact of three rate rises in quick succession has had a far more dramatic effect on property buying than anything we saw during the global financial crisis - people are not moving or upgrading their family homes. They’ve slammed the brakes on borrowing.”

Australia ’s central bank raised its benchmark interest rate to 3.75% in December 2009, its third increase in three months, as evidence of an economic recovery mounted. Median house prices in Australia’s eight state and territory capitals climbed by +4.8% in Q4 2009 to AU$525,524 and were +12% higher than 12 months previously.