Increasing numbers of people are fixing their home loan rates, spooked by the prospect that interest rates may have bottomed and could rise.

But although the number of fixed-rate loans hit a 10-month high in May, mortgage experts say people aren’t panicking and it’s too early to tell if the Reserve Bank of Australia (RBA) has finished cutting rates.

Australian Bureau of Statistics (ABS) data shows fixed-rate home loans rose to 6.5 per cent of the home loan market in May, up from 4.2 per cent in April and at the highest point since July last year when they made up 8.8 per cent.

However, Harry Senlitonga, a senior financial analyst with Canstar Cannex, says the percentage of fixed-rate loans is still very low.

“Compare that to three years ago when 25 per cent of all home loans were fixed rate,” Mr Senlitonga said.

“It’s too early to say that interest rates are going to rise, but the number of new loans in fixed interest rates indicates people are cautious about whether it may go up again.

“The safe thing for them to do is lock in at a low rate.”

The average three-year fixed interest home loan rate was 6.05 per cent in May compared with 9.40 per cent in July last year, the RBA website says.

The number of new fixed rate loans plunged to a low 2.5 per cent in March this year, compared to 24.9 per cent in February 1998 – its highest percentage since the series began in 1991.

The falls came after the central bank slashed interest rates, chopping 425 basis points between September last year and April. At the same time fixed rate loans dropped from 8.50 per cent in September to a low of 5.60 in March.

Earlier this week, the RBA decided to keep the cash rate a 49-year low of three per cent but said there was still scope to ease rates further.

CommSec Economist Craig James says the number of fixed interest home loans as a percentage of all loans is still at historically low levels suggesting people aren’t panicking about a rise.

“If people were concerned about their jobs, and job security is a big deal when it comes to whether you go down the fixed term or variable route, I would have thought there would have been a bigger take up of fixed rate loans,” Mr James said.

“I think it’s comforting that we’ve only seen a modest up tick in fixed rate loans.

“It shows that people aren’t panicking.

“I think the message is getting through that if you try to pick the interest rate cycle to determine whether you should be going fixed or variable rate, it’s absolutely the wrong thing to do.”

Economic indicators this week showed people are feeling more confident about the economy in general.

The Westpac-Melbourne Institute index of consumer sentiment rose by an unexpectedly strong 9.3 per cent in July to a seasonally adjusted 109.4 points.

A reading above 100 shows that optimists outweigh pessimists.

ABS data showed unemployment had hit a six year high in June but this was still lower than market expectations.