Home loans have dropped to their lowest level in almost half a century after the Reserve Bank’s surprise interest rate cut in February.

Mortgage rates fell to 4.9 per cent after the cut, levels not seen since 1968 – the year Martin Luther King Jnr was shot in the United States and Hey Jude by the Beatles was at the top of Australian music charts.

Auction clearance rates have also surged to a six year high, research by CoreLogic RP Data shows.

Home owners with a $400,000 mortgage in late 2011 – before interest rates started falling – paid about $27,200 a year in interest.

But now those payments total just $19,400 – a saving of $150 per week.

Meanwhile, auction clearance rates in capital cities around the country surged above 76 per cent in the last two weeks of February, CoreLogic RP Data head of research Tim Lawless said. “Vendors have become more empowered as buyers compete more fiercely for available housing stock,” he said.

He expects an already high number of auctions to pick up further over the coming weeks and for more properties to hit the market.

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Mr Lawless said with the housing market running so hot, the Reserve Bank and regulators faced the challenge of trying to keep a lid on soaring property prices.

AAP