TSB chief executive Kevin Murphy said the new offer would appeal hugely to those new to home ownership, and also to people looking to refinance their home loan and to residential property investors.
"We canvassed home owners who had taken out a mortgage or renewed their mortgage in the last five years and they described our new offer as highly appealing," he said.
"We think there is a gap in the market and that consumers are looking for certainty around long-term interest rates."
Although interest rates changed over the years, having one set out over a longer period would benefit a lot of people and families, Mr Murphy said.
"To know what your interest rate will be and you can budget on that for a longer period - for people who need to manage their incomes closely, I think this will be very attractive."
The 10-year fixed rate will also be transferable if a borrower shifts homes after two years, for example.
BNZ's seven-year fixed home loan - currently 6.89 per cent - is the next longest-term loan offered by a bank.
Massey University banking expert Associate Professor David Tripe said he believed TSB was the first bank ever to offer a 10-year fixed-term home loan in New Zealand.
"The historic reason why banks have been less keen to do that here is issues around customer understanding - which tend to be not very good, and they tend to want to exit them if there's any signs of interest rates changing.
"Bank customers haven't understood that issue particularly well, and also there is often a challenge for banks to actually protect themselves in offering loans for long periods of time."
Professor Tripe did not know what the average interest rate had been over the past decade, but acknowledged that an important factor for customers was simply knowing what they were likely to do over the next few years.
"The majority of fixed-rate loans are taken for two to three years because that gives greater flexibility. It's about being certain about the future of your life, really."
ANZ spokesman Stefan Herrick said people tended to be cautious about longer-term loans "as there is greater potential for financial or personal circumstances to change during the term of the loan, and the possibility of costs arising from exiting the loan early".
Westpac senior economist Michael Gordon said the move was a new step for home loans in New Zealand.
Mortgage borrowers in the United States were offered extremely long terms of 30 years, he said.
Last night, ASB announced it was cutting its 18-month and 2-year fixed-interest rates to 5.99 per cent.
The 2-year fixed-rate special has also dropped to 5.45 per cent.
Mortgage rate wars - Longest fixed-rate offered by banks
•
TSB Bank:
10 yrs, fixed rate 5.89%
• BNZ: 7 yrs, 6.89%
• Kiwibank: 5yrs, 5.89%
• ASB: 5yrs, 6.49%
• ANZ: 5yrs, 6.59%
• Westpac: 5yrs, 6.99%
