Major banks say they are reviewing their home loan rates but so far none have moved to match Kiwibank.
The state-owned bank yesterday slashed its variable loan rates by 1 per cent, in a move it says will save home loan and business banking customers $20 million.
Kiwibank dropped its floating and offset mortgage home loan rate from 4.4 per cent to 3.4 per cent and its revolving home loan rate from 4.45 per cent to 3.45 per cent.
It's the latest move by a bank in New Zealand in the mortgage wars that continue to heat up.
It's good news for Kiwi homebuyers who can save big bucks on their loans - all they have to do is shop around and examine all the different offers, as banks hope the rate slashes will renew buyers' enthusiasm, post Covid-19 lockdown.
But so far it seems the Australian-owned banks which control around 80 per cent of the mortgage lending market aren't budging on their variable rates.
A BNZ spokesman said: "We're always reviewing our rates and while we have no changes to announce at the moment, we have market leading 18 month fixed term rate and all our classic rates (that is up to five years) are sitting below 3 per cent."
He said the home loan market was very competitive.
"We urge anyone considering their home loan options to talk to BNZ."
A spokeswoman for ANZ said it was constantly reviewing its home lending rates but pointed to the fact the majority of borrowers are on fixed term rates.
"More than 85 per cent of our home lending customers are on fixed rates and we currently offer a 1- year fixed rate of 2.65 per cent."
A Westpac spokesman said: "Our rates are always under review and subject to change, but we have no announcements to make at this stage."
Craig Sims, ASB executive general manager retail banking, said it continually reviewed its rates.
"As part of this, you will see that we recently cut some of our fixed home loan rates, so we now offer one of ASBs lowest ever fixed interest rates of 2.69 per cent for two years.
"Supporting our customers' financial wellbeing is our main priority, and one that is as important in the current circumstances as ever."
Most of the major banks are offering floating home loan rates around 4.44 or 4.45 per cent while homeowners can grab a rate as low as 2.65 per cent fixed over a year at the main trading banks and 2.55 per cent fixed for one year at Bank of China.
Last month, ANZ dropped its one-year fixed home loan rate to 2.79 per cent, which it says is "well beyond historic lows".
Ben Kelleher, ANZ managing director retail and business banking, said the new rates put more money in the pockets of customers.
• Mortgage wars: NZ's largest bank offers home loan under 3 per cent
• Mortgage wars: ASB cuts two year home loan rate to 2.69%
• Mortgage wars: Banks cut rates below 3 per cent but first home buyer caution urged
• Mortgage wars: ANZ offers 2.79 per cent home loan rate
"These new rates reflect a new reality where many home loan customers are facing uncertain times and our commitment to keeping rates as low as possible to help ease the pressure," Kelleher said.
"Putting more money back in the pockets of customers will enable them to repay debt, or support the wider New Zealand economy as the country recovers from restrictions brought on by Covid-19."
ASB has dropped its rate to 2.69 per cent over two years fixed on home loans.
It has also cut its rates by between 20 and 34 basis points for terms between six months and four years.
The move happened one day after Westpac cut its one-year fixed term rate to 2.79 per cent, matching the announcement by ANZ earlier that week.
Kiwibank dropped its one-year fixed rate to 2.65 per cent, with both ASB Bank and AIA/Sovereign offering two-year fixed loan to value ratio options at 2.69 per cent.
HSBC's premier two-year rate is as low as 2.60 per cent.
First home buyer caution urged
Despite rate cuts, first home buyers are being urged to stay cautious.
Property prices are also expected to fall with the experts predicting an 8 per cent slump in Auckland and 7 per cent fall in Christchurch.
Despite the predicted house price slump the majority of experts surveyed did not think it was a good time to buy property.
Kevin McHugh, Finder's publisher in New Zealand, said job security remained key for first home buyers eager to pounce while prices were down.
"First home buyers with a secure job are being presented with a unique opportunity to enter the market sooner than expected," he said.
"But the combination of a looming recession, job cuts and no vaccine as of yet means it's shaky territory on the employment front."
How low can they go?
Mortgage adviser Sara Hartigan told TVNZ's Seven Sharp last month that this latest round of rate slashing might not be the last one.
"We've never seen rates this low before and I'd say in a couple of months you may even see them around the 2.5 per cent mark," she said.
The adviser said this is a good time for those with pre-existing mortgages to shop around for a better deal.
She advised Kiwis to, when possible, opt for a fixed rate versus a variable one.
"In this uncertain economic climate I would say fixed, especially if there is a little bit of doubt around job security," she said on the show.
"With fixing you know how much is coming out each month and it gives you a chance to budget accordingly."