Kiwibank is cutting its two-year fixed home loan rate to 6.99 per cent per annum from 7.30 per cent.

Kiwibank chief executive Sam Knowles said the rate cut was to give some certainty to customers who are concerned about interest rate volatility.

Kiwibank has also introduced a 12-month cap option on its variable rate, which for a $250 fee ensures the rate does not increase above 6.50 per cent per annum for 12 months. The current variable rate is 5.9 per cent.

Economists are generally forecasting that interest rates will rise as the Reserve Bank of New Zealand shifts monetary policy to a more normal setting as the global economy recovers.

- NZPA