The sharpest fall in home loans since the depths of the global financial crisis has prompted calls for the Reserve Bank to slice interest rates and cast doubt over the state of the budget leading into the federal election.

As the NAB said the Reserve may have to cut rates within months, figures from the Australian Bureau of Statistics revealed first time buyers and investors deserting the property market in a sign house prices may fall even further.

Home loans in December fell by 5.9 per cent. It was the second largest monthly fall since 2008-09 while the annual fall of 19.8 per cent was the worst since the global financial crisis.

The biggest annual fall in home loans since the Global Financial Crisis has prompted concerns about the state of the economy. Credit:James Alcock

Investor loans have tumbled 28 per cent over the past year while those for owner-occupiers have slumped by 16 per cent. Since their peak in mid-2015, investor lending has dropped by almost 48 per cent.