Rising interest rates are adversely affecting the housing market and in addition have also resulted in a fall in consumer confidence. The figures reveal that the number of new housing loans approved in December registered a 6.2 per cent slip, with the total now 15.6 per cent below the peak reached last September.

However, strong profit reports from the Commonwealth Bank and BHP Billiton yesterday extended a confirmation on health of the economic recovery.

It is reported that soaring home loans accounted to a record-breaking $2.9 billion half-year profit, which differed with the bank's global peers afflicted with the consequences of the financial crisis.

The Westpac Melbourne Institute consumer sentiment index, released yesterday, posted that rates hikes and concerns over financial stability were also taking their toll on consumer confidence.

The survey conducted at the beginning of the month revealed a 2.6 point fall to 117 points.

Although the Reserve Bank had posed a surprise to many by keeping rates steady last week, more than 60 per cent of consumers speculated rate hike by a full percentage point or more over the next year, Westpac chief economist Bill Evans claimed.

The increase in house prices is attracting increasing numbers of investors back to the housing market, with a 1.9 per cent lift in the value of new investment loans in December.