The Westpac-Melbourne Institute consumer sentiment index, issued today, was effectively steady, rising from 117 last month to 117.3 in March.

Westpac chief economist Bill Evans described it as a solid result given the Reserve's decision last week to raise interest rates by 25 basis points to 4 per cent. It was the fourth increase since October and took the average variable mortgage rate to about 6.9 per cent, and ''history suggests 7 per cent is a significant threshold mortgage rate for consumers''.

Previous rate rising cycles indicated consumers would be "nearing the point where confidence becomes much more sensitive to increases in interest rates''.

''Of course households are holding significantly more debt than during that last period. Debt-to-income ratios are around 20 per cent higher today than they were in 2003. And that may make them more sensitive to rises this time around,'' he said.

New Australian Bureau of Statistics data were expected to show a 2 per cent increase in the number of loans, but instead recorded the fourth fall in a row and the largest drop in almost a decade.

The number of new home loans for owner occupiers fell a seasonally adjusted 7.9 per cent in January. Loans to build houses were down 3.9 per cent, loans for new homes were down 13.2 per cent and loans for established homes fell 8.2 per cent.

The value of the loans was down 3.3 per cent, because a 0.9 per cent increase in the value of investment loans could not make up for a 5 per cent fall in the value of owner-occupier loans.

The ACT recorded a 4.4 per cent drop in the number of loans to 1038 and the value of the territory's owner-occupier loans dropped 1.4 per cent to $290 million.

The proportion of first home buyers also continued to fall, dropping from 21 per cent in December to 20.5 per cent in January, although the average loan size for a first home buyer also fell - for the first time in six months - to $284,700 from $290,100 a month earlier.

The average home loan size is $282,600 in Australia and $270,100 in the ACT.