You're correct.
Most people have variable-rate home loans. In the past few years, fixed five-year loans have become more common. Basically you're on a fixed rate for the first five years, and then after that you're onto a normal variable rate.
Most economists here predict house prices will fall further as people sell due to mortgage stress. At the moment it looks like most people are hanging on. Historically speaking, interest rates are still pretty low. And I think people are reluctant to sell due to fear they won't get a decent price, and that if they wait a few years house prices will be back up.