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Business people walk outside the Reserve Bank of Australia (RBA) in Sydney May 5, 2015. Australia's central bank cut its cash rate a quarter point to an all-time low of 2.0 percent on Tuesday, aiming to spur a sluggish domestic economy while keeping downward pressure on the local dollar. REUTERS/Jason Reed

Demands for fixed rate home loans have dropped to a three-year low from 18.5 percent in July to 17.4 percent in August. The lower demands in the fixed rate home loans are surprising at the current market conditions for real estates.

"Generally speaking, when the market is volatile and lenders are moving their rates -- as they are doing now -- fixed rate demand increases, as borrowers look for security and consistency around their mortgage repayments," Mortgage Choice chief executive John Flavell was quited as saying by AAP.

Though unusual, a number of lenders have increased their interest rates in recent times. Nevertheless, people are going for variable interest rates. According to Flavell, while Victoria has the lowest demand for fixed rate loans, South and Western Australia are only a few steps behind.

"With rates sitting at historically low levels, it is fair to say that regardless of whether a borrower chooses a fixed rate or variable rate home loan, they are going to secure a competitive rate," he said.

Recent reports have also suggested that the demands for variable rates home loans have risen considerably as well. Flavell has advised borrowers to do extensive research before opting for a home loan. The complexities in the real estate markets have increased substantially over the past few months, with home prices continuing to fly higher up.

After the Reserve Bank of Australia limited the growth capacity of the lenders by 10 percent every year, many banks have been forced to introduce changes to their existing policy and pricing.

People who want certainty of repayments or are not prepared to sell off the property in question or break the loan midway are mostly advised to go for fixed rated loans by mortgage experts. However, borrowers would only get affected if the interest rate falls further. But according to experts, this scenario is unlikely because the interest rates are already pretty low.

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