Home buyers have not had it so good in Australia since God Save the Queen was our national anthem.

Most lenders now offer variable home loans below five per cent – staggeringly low rates not seen consistently since the 1960s and 1970s.

Heritage Bank is offering 4.39 per cent, the lowest of 62 lenders with rates under five per cent.

• Where foreign investors are buying in Australia
• Four things to never tell a real estate agent
• Hidden property flaws: check before you buy

Average home loan rates have been hovering around the five per cent mark since last year, which they have not done since 1970, according to Reserve Bank data.

The average standard variable rate was 5.95 per cent in October, the lowest in five years.

Mozo.com.au director Kirsty Lamont told The New Daily that fierce interest rate competition is “an early Christmas rates bonanza for borrowers”.

“We haven’t seen challenger lenders competing this hard against the big four banks and each other since before the global financial crisis,” Ms Lamont said.

The comparison website has crunched the numbers on 551 loans from 79 providers and found the average variable home loan rate is 5.22 per cent.

The big banks do not seem to be keeping up. The average standard variable rate with the big four is 5.38 per cent, Mozo said. It calculates that someone with a $300,000 loan could saved $2,064 a year by switching from a big four bank to the lowest rate available.

Be cautious

The potential to save thousands certainly sounds like good news for borrowers, but a real estate expert warns that falling home loan rates betray low demand in the housing market and a weak economy.

Real Estate Institute of New South Wales president Malcolm Gunning told The New Daily that second-tier lenders are scrambling to find borrowers.

“It says there’s available money but not the take-up that some of the lenders would like, so they’re chasing business,” Mr Gunning said.

A savvy property investor would interpret low rates as a warning sign that rates will rise in future, possibly much faster than property values. So don’t borrow more than you can afford to repay at a much higher rate.

“We think it’s a terrific opportunity, but prudent purchasers should be mindful that this is not going to last forever and property prices will not always grow,” Mr Gunning said.

“You wonder if some of the lenders might not reflect back to the GFC and be mindful that property prices won’t always rise and that we may even see a slight correction,” he said.

Fix for certainty

Given that rates are likely to rise in the long term, Mr Gunning suggested negotiating a fixed rate if you want certainty.

“If you can rock them down on a fixed interest [loan] for a length of time, it’s very good money. Be mindful that this is not going to last,” he said.

Don’t take rates at face value

Never take an advertised rate as gospel, Mr Gunning said. A very low rate often comes with terms and conditions.

“Make sure you read the fine print. It might be for a short term, and then it jumps up.”

Negotiate before you jump ship

Just as advertised rates can be too good to be true, less-than-competitive rate can often be negotiated down, Mr Gunning said.

With second-tier lenders offering such low rates, you are well placed to get a better deal from your bank, especially if you have a good track record, he said.

“You should be going back to your bank and saying, ‘I’ll move unless you can match’.

“You might get a pleasant surprise.”