Labor and the coalition are locked in a tit-for-tat battle over who should accept the blame for home owners who locked themselves into fixed mortgages just months before interest rates started falling.

The official cash rate has come down four percentage points since last September and is now at its lowest level in 45 years.

But the massive cut in mortgage rates has little impact on home owners who locked themselves into a fixed rate when inflation was the biggest problem facing the economy.

Treasurer Wayne Swan lays the blame at the feet of the former Howard government because it presided over 10 interest rate rises.

He acknowledged that people on fixed rates were in a difficult position.

“The main reason that they are there … is because interest rates went up something like 10 times under the Liberal Party,” Mr Swan told Network Ten.

“And, of course, many people reacted to that by fixing their rates.”

A year ago – with petrol prices skyrocketing and the cost of food on the rise – inflation was the biggest problem facing the government.

Prime Minister Kevin Rudd talked about the “inflation monster” as the consumer price index headed towards five per cent – way outside the Reserve Bank’s target range of two to three per cent.

Mr Swan stressed that few had predicted the magnitude of the economic crisis that engulfed the globe last year.

“The whole world changed in the middle of last year and the balance of risk in the international and national economy changed from inflation to a dramatic slowdown in growth,” he said.

“And the consequence of that is that some people have, unfortunately, been left with fixed rates.”

Opposition treasury spokesman Joe Hockey insists the Rudd government has to take responsibility for what happened to home owners.

“The government took exactly the wrong path in trying to deliberately slow down the economy in its so-called war against inflation at a time when there was a looming credit crisis and, obviously, very dark clouds on the horizon,” he told ABC TV.

“The Reserve Bank was egged on to increase interest rates by implication if not directly by the government.”

Mr Hockey said it was a disaster for people on fixed mortgages.

“Now, they may well be paying 400 basis points or … up to four per cent more for their mortgage today than they would have if Kevin Rudd had not declared a losing war on inflation,” he said.

On Friday, the Reserve Bank of Australia (RBA) told a parliamentary hearing that the number of people taking out fixed mortgages rose early last year.

Malcolm Edey, the RBA assistant governor, said the flow of new fixed mortgages had gone up from “10 per cent, or a bit higher, it went up to over 20 per cent for a while early last year”.

RBA governor Glenn Stevens said that usually when interest rates went up “and some people expect they might rise further, the share of fixed rate loans goes up”.

The official cash rate rose in February and March last year.

AAP