Every state and territory recorded a mortgage increase well above the lift in wages, which grew by 2.3 per cent through the year. CommSec chief equities economist Craig James said while the national average mortgage was now at $500,000 it would be difficult for it to grow much faster given the drag on incomes for most borrowers. He said if mortgages continued to rise the Reserve Bank would also become concerned. "The RBA governor has said if it gets a bit crazy, if there's irrational exuberance, then it would have to look at what is going on," he said.

In evidence to a parliamentary committee last week, governor Philip Lowe said if people borrowed more to buy a home while already carrying "quite high" debt, this could cause broader economic problems for the nation. Loading The total value of home loan approvals jumped by 4.4 per cent in December to be 14 per cent higher over the year. Since the most recent low point in May, new loans have climbed by 20.7 per cent with loans to owner-occupiers up by 22.8 per cent over the same period. First time buyers have also taken advantage of the combination of low interest rates and better prices. Loans to this segment grew by 6.2 per cent in the month to be up 38 per cent over the year. First time buyers accounted for 30 per cent of the owner-occupier market. There were also signs of a lift from investors with the value of investment lending up by 2.8 per cent in December to be 4.9 per cent better over the year.

The increase in lending came as house prices in Sydney and Melbourne were climbing by more than 1 per cent a month. CoreLogic's daily house value index shows both markets continuing to motor, with values in Sydney up 0.6 per cent so far through February, while in Melbourne they have climbed by 0.5 per cent. While the property market strengthens, the rest of the economy is finding it tougher going. Loading Replay Replay video Play video Play video NAB's closely watched monthly business survey showed trading conditions unchanged through January and remaining well below their long term average. Confidence lifted slightly but remains in negative territory. Service businesses are in a better position than those producing goods, with NAB reporting the retail sector remained "sick".