A survey made by consumer credit company Veda Advantage showed that applications for residential mortgage fell in the first quarter after the government's first home owner's grant was reverted to its pre-financial crisis levels.

According to the quarterly consumer credit demand index by Veda, the total mortgage applications declined from January to March compared with the same period last year. It also marked the first time the consumer mortgage demand since Q4 of 2008.

Compared with the Dec-09 quarter, the total mortgage applications fell 8 percent leading to the March 31 quarter, Veda said.

The federal government raised the amount of home owners grant to $21,000 for the construction of new homes from $7000 in October 2008 at the height of the global financial crisis. While grants for existing homes was raised to $14,000.

Last October, the Feds reduced the amount of grant for new homes to $14,000 and $10.5000 for existing homes. The grants for both categories were reverted back to $7000 effective January 1 this year.

Chris Cration, head of external relations at Veda commented on the downward trend, ''One consequence of a withdrawal in government incentives is a relatively sharp drop off in housing credit demand in 2010."

He pointed out that the government's stimulus measures introduced during the global financial crisis helped push demand for mortgage.

A separate study made by the Australian Finance Group also showed that first time home buyers are declining in numbers. Their number dropped from 28 percent in March 2009 to 10 percent in March 2010.