Mortgage wars: All major banks now offering 2.29pc rate

All the major banks are offering a low one year fixed term. Photo / Doug Sherring

Two more major banks have joined the fray to offer a super low rate on the one-year fixed-term mortgage front.

BNZ this morning released a rate update dropping its one-year rate to 2.29 per cent, matching that of ANZ and Westpac, while ASB has also dropped its rate to match it.

Westpac was the first bank to offer the 2.29 per cent rate on January 11 and ANZ followed suit earlier this week.

TSB is also continuing to match the rate of the Australian-owned majors.

The 2.29 per cent rate is the lowest for the major banks but other banks are still cheaper.

Heartland Bank is still the cheapest, according to interest.co.nz, with a rate of 1.99 per cent fixed over one year.

HSBC is also lower than the majors, with a rate of 2.25 per cent.

BNZ also dropped its two-year fixed-term rate to 2.59 per cent, matching that of ASB, although Heartland Bank is still offering the lowest rate for two years at 2.35 per cent.

Those who want to grab the BNZ classic specials must have at least 20 per cent equity or deposit lined up.

ANZ and Westpac also have conditions on their specials.

Those wanting to nab the ANZ rate must have 20 per cent minimum equity and an ANZ transaction account which their salary is direct-credited into.

The special is also not available with package discount offers.

Westpac's rate is only available to customers with 20 per cent equity in owner-occupied homes.

While low-interest rates can be appealing, homeowners are advised to first check with their bank or mortgage broker to find out if the associated break fees make the savings worthwhile.

The low rates currently on the market come at a time of growing concern about the state of the property market in New Zealand.

REINZ data showed Auckland median house prices hit $1 million for the first time in October last year, and the national median shot up 19.8 per cent from $605,000 last year to $725,000.

And those high prices have done little to dampen buyer enthusiasm as, in November, the highest number of houses were sold since March 2007.

Economists are now predicting that house prices could rise by as much as 13 to 16 per cent in the next few months.

This will only put further pressure on the many Kiwis currently locked out of the housing market, with home ownership rates at the lowest level since 1951.

Rapidly increasing house prices also have repercussions for those on the property ladder, with data from credit agency Centrix showing that nearly one in five over-65s still have a mortgage.