Buyers continue to stay away from fixed rates.

Although the proportion of fixed rate mortgages reached an eight week high in April, accounting for 6.8% of all home loans, the number declined again slightly in May to reach just 6.5%, according to statistics from mortgage broker Australian Finance Group (AFG). Some 66.4% of borrowers chose variable rate loans in May, with the remainder equity-based or intro rate loan types.

Mark Hewitt, general manager for sales and operations at AFG, said he was surprised by the results.

"It suggests that most property buyers are expecting more bad news on the economy, which will in turn force interest rates down," he said. "While this may have an impact on variable rate mortgages, our view is that longer term fixed rate loans may have bottomed out. Many property buyers may have missed the boat already."

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