Evidence of an economic slowdown is mounting and adding to rate hike risks,

Lending to both owner-occupiers and investors fell more than 4 per cent in December to be almost 30 per cent lower than a year earlier. The Australian Bureau of Statistics reported "anecdotal feedback" from lenders that increasing interest rates were dampening demand for housing credit.

Underlining the heightened financial pressure home buyers are under, the ABS reported $19.1 billion worth of mortgages were refinanced in December - a near-record amount. This figure is expected to surge higher during the year as the home loans taken out by more than 800,000 borrowers switch from fixed rate to variable, significantly increasing their repayments.

The results add to an accumulation of data in the past week showing the economy is slowing and inflation is easing, raising concerns about indications from the Reserve Bank of Australia at least two more rate hikes are likely.

Following the RBA board's February 7 meeting, governor Philip Lowe said it was expected "further increases in interest rates will be needed over the months ahead".

Markets expect the official cash rate will be raised 3.6 per cent next Tuesday and will reach 4.1 per cent by August.

But since the governor made his hawkish statement, updates on the economy and inflation have been softer than expected.

Gross domestic product slowed to an annual rate of 2.7 per cent in the December quarter while job vacancies - though still high - dropped to 2.8 per cent as firms became increasingly able to fill positions.

In January, the unemployment rate rose to 3.7 per cent and the monthly inflation measure eased 1 percentage point to 7.4 per cent.

In further evidence that no wage-price spiral is currently in prospect, in the December quarter the RBA's preferred measure of labour costs, average non-farm earnings per hour, was just 2.9 per cent.

ANZ economists said Reserve Bank adjustments to the ABS data showed it was even weaker, just 2.5 per cent, well below the 4.7 per cent annual growth predicted by the central bank.

Commonwealth Bank's head of Australian economics Gareth Aird said it was an "ironic twist of fate" the softer economic data came out soon after Dr Lowe had adopted his more hawkish tone.

Mr Aird said although a rate rise on Tuesday was "a near certainty", the risk the central bank could push the economy into recession was increasing with each hike.

"They are not done yet but the risk is that they do a bit too much," he said.

"The recent data indicates the RBA may now be tightening policy into an economy already showing sufficient signs of softening."

But Mr Aird said the RBA's concern about inflation meant it was likely to err on the side of pushing rates too high rather than having them too low.

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The economist said the current tightening cycle was "unique" because of the rapid succession of hikes.

"Normally, they would move [the cash rate] and then watch the data for a month or two before moving again. They left it very late to start raising rates," he said.

Mr Aird tipped rates would peak at 3.85 per cent and be back down to 3.35 per cent by the end of the year as the labour market slows and the unemployment rate rises to 4.3 per cent.