Australian housing finance fell in August for the second consecutive month as demand for mortgages crimped.

The fall in demand came about with expectations of higher interest rates.

Having enjoyed robust support from first-time homebuyer grants unleashed by the government to pump demand, economists expect homeloan supply to correct further in coming months as the central bank embarks on a tightening cycle.

The Reserve Bank of Australia, which yesterday lifted its key rate by 25 basis points, has warned against rising house prices brought about by under-supply.

The Australian