The number of people taking out a new mortgage plunged nearly eight per cent in May.
Economists were expecting a drop of around two per cent.
Just 52 thousand people signed up for home loans in May, the lowest number since October 2004.
Other data issued today also suggests people are less likely to be making a huge financial commitment like a home loan in the near future.
The Westpac-Melbourne Institute consumer sentiment index dropped another 6.7 per cent in July to its lowest level since January 1992.
Consumer sentiment has now slumped 34.6 per cent in the past year to be just 7.1 per cent above the low point of the 1990-91 recession.
Continuing high interest rates, rising petrol prices, a drop in the share market and St George Bank's decision to lift its rates independent of the Reserve Bank all unsettled consumers.
Federal MP for Blaxland Jason Clare has been organising workshops to help those suffering mortgage stress but he's told 2GB’s Chris Smith there's something that would really ease the pressure.
“The one thing that’s going to help the people in my electorate more than anything else is getting interest rates down, because every time they go up it’s an extra 50 bucks out of their purse.”