The number of mortgages in Western Australia dropped in December as more people considered fixed-rate mortgages to counter the threat of rising interest rates.

Fixed-rate mortgages became more popular in 2010, comprising of 12.6 percent of the overall market, up from 2 percent during the same period last year.

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Looking at the overall mortgage market in the country, the total number of mortgages slowed down by 10 percent. Total mortgages processed in 2010 has declined by $30 billion compared 2009 with total value reaching $27 billion.

Mortgage broker AFG reported that the state’s mortgage market shrunk by 13.7 percent last year, the third highest decline after Queensland with 23.6 percent and South Australia with 22.9 percent. Moreover, the state had the second highest average mortgage price in December at $396,047, after New South Wales with $432,540.

This figure is an increase from average mortgage sizes in Western Australia the year prior amounting to $390,000, with about 15.8 percent of the 1,049 mortgages sold then taken by first time homeowners. In comparison, the total number of first-time buyers dropped 13.9 percent in December 2010 out of the 1,097 mortgages sold.

AFG general manager sales and operations, Mark Hewitt, said 2010 was hard due to “interest rate rises, issues with competition and fears surrounding the mining tax.”

Major lenders in Australia chose to highlight fixed-rate loans last year as consumers grew cautious about possible interest rate hikes.