Australian borrowers are increasingly becoming uncertain about the future of mortgage rates.

Westpac's latest Housing Pulse report showed a quarter of Australian consumers "do not know" and are “somewhat confused” where mortgage rates are going.

Westpac senior economist Matthew Hassan said this was the highest recorded share of consumers who are unsure about the future of interest rates.

This was almost double the 13.3% share of consumers who have uncertain outlook in February 2021.

"Our general impression is that most consumers understand rates are at the bottom of the cycle but that there is a high degree of uncertainty about when they might start to move higher," Mr Hassan said.

Among consumers who have an outlook about rates, more than half expect interest rates to rise over the next year, while around two in five believe rates are going to stay the same.

Only 4% of the respondents think interest rates are going to decline further.

Mr Hassan said Australia's standard variable mortgage rates are likely to remain unchanged for a long time, as the cash rate is slated to be maintained at its historic low until 2023.

Related: RBA keeps cash rate at historic low

"While interest rate moves are not expected to have a direct bearing on the economy, interest rate expectations may still have some bearing on decisions," he said.

"Notably, the combination of bullish price expectations and current views on interest rates may be amplifying affordability strains."

Low rates to support housing demand

Affordability constraints have started to show over the past month, with house prices growing at a slower speed in July, according to CoreLogic.

Research director at CoreLogic Tim Lawless said the low interest rate environment would be able to help support housing demand as house prices become a concern.

“With housing values rising substantially faster than incomes, it’s taking prospective buyers longer to save for a deposit and a larger portion of their income is required to fund their transactional costs,” Mr Lawless said.