The proportion of mortgages taken out by first time home buyers have doubled in Victoria since the expansion of the first time home owners grant in October, according to a report.

Sales of mortgages to first time home-buyers jumped to 25.3% of total mortgages in December, from 13.8% in September, according to the AFG Mortgage Index, released today.

"Younger people with reasonably secure jobs have become an important force in the property market during the past few months," said Mark Hewitt, general manager of sales and operations at mortgage broker Australian Finance Group in a statement.

AS financial gales whirl about our ears, older Australians in search of funds increasingly have turned to reverse mortgages. Often it is a stop-gap measure until super balances recover and can provide a source of cash.

Yet everyday reverse mortgages may become harder to get, or more expensive, because of falling property prices that have prompted a wave of lenders to stop offering the product.

Financial firm Canstar Cannex has announced, for example, that that it will no longer rate reverse mortgage products, citing eight lenders, including Macquarie Bank and Bluestone, that have left the market or stopped promoting new loans in the past six months.

MEREDITH BOOTH, SARAH MARTIN

ANZ and Westpac have each dropped their standard variable home loan rate by a full percentage point to 5.91 per cent in response to today's Reserve Bank decision.

The Reserve this afternoon slashed interest rates by one percentage point to 3.25 per cent - expected to save the typical SA household $154 a month in mortgage repayments.

The decision, made today at 2pm Adelaide time, would bring total monthly savings to more than $634 on a typical SA mortgage of $250,000 since the RBA first cut rates in September 2008 - if banks pass on the cut in full.

* Interest rates cut to 3.25pc
* Cash rate now at 40-year low
* Stimulus: Rudd's $42bn cash boost

THE Reserve Bank has cut interest rates by 100 basis points to 3.25 per cent, citing a "significant deterioration" in world economic conditions since late last year.

Interest rates are now at their lowest point in 45 years.

Anne Davies

AUSTRALIA may be heading into recession but its housing market will fare much better than other countries, the International Monetary Fund says.

Unlike property markets in the US and Europe, which have experienced 40 per cent drops in prices as the housing bubble is pricked, Australia is not suffering from the same magnitude of inflated house prices, or the same sort of collapse once the bubble burst, says the IMF's Asia and Pacific Department's division chief, Ray Brooks.