ASB, BNZ and Westpac have followed rivals ANZ and Kiwibank and cut mortgage rates in the wake of the Reserve Bank's decision to drop the official cash rate.

The RBNZ cut the OCR from 1.75 per cent to 1.5 per cent yesterday - a new record low which puts New Zealand's cash rate in line with Australia's official cash rate.

ASB said today it was lowering its "variable" home loan rate by 0.10 per cent from 5.80 per cent to 5.70 per cent per annum

ASB also cut its "Orbit" home loan rate by 0.05 per cent to 5.75 per cent per annum.

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"We have carefully considered the RBNZ's decision to lower the OCR along with balancing the needs and expectations of all our customers. Our new lower rates provide a competitive option for borrowers while also balancing the needs of our savings customers," says Craig Sims, ASB executive general manager of retail.

BNZ also announced a cut of 10 basis points off its floating rate to 5.80 per cent for owner occupiers and to 6.05 per cent for residential investors.

BNZ said it would be leaving its savings rates as are until a review had been conducted.

ANZ, the country's largest bank, said yesterday it would cut 10 basis points of its floating and flexible home loan rates and between six and 14 basis points off its fixed term rates.

Antonia Watson, ANZ managing director of retail and business banking, said fixed home loan rates had fallen steadily since the last OCR cut in 2016.

In March 2017 the bank's one year fixed special rate was 4.39 per cent and now it would be 3.89 per cent.

Watson said the low-interest rate environment presented opportunities for borrowers.

"The current extreme low-interest rate environment not only represents an opportunity for
new home buyers to enter the market, but for existing home loan customers to pay off as
much of their debt as possible."

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But it will also cut its term deposit rates shaving 15 basis points off its 90 day term rate and 25 basis points of its 60 and 120 day term deposit rates.

"It's important that people maintain healthy savings, but a lower cash rate will impact on
deposit interest rates."

Watson said it was concerned people might seek higher interest rates through riskier investments and savings options.

"Lower deposit interest rates will also be a concern for the elderly who rely on interest
income in retirement."

Kiwibank also cut both mortgage and deposit rates.

It will cut its floating home loan rates by 15 basis points to 5.65 per cent for those on a variable rate and offset rate and 5.7 per cent for those on a revolving retail rate.

But will also slice 15 basis points off many of its term deposit rates. Its 90-day rate will fall to 3.1 per cent and its 32-day saver rate will fall to 2.1 per cent.

Online call and business online call account rates will also fall 15 basis points.

Mark Wilkshire, Kiwibank chief marketing officer said it was good news for customers with variable home loan products.

"We are making these changes so that our home loan customers get the benefit of market changes."

The changes come into force for new customers of the banks from May 13 and existing customers on May 27.

Westpac also followed the OCR, cutting its 'The Choices' floating rate by 16 basis points to 5.79 per cent and its revolving 'Choices Everyday' rate to 11basis points to 5.84 per cent.

Westpac's fixed special one-year rate has been reduced by 16 basis points to 3.89 per cent, while its fixed special two-year rate now sits at 3.95 per cent.

There were also changes on Westpac's savings interest rates, with 90-day term deposit rate dropping by 15 basis points to 2.5 per cent. The bank's four-month term deposit rate has been reduced by 15 basis points to 2.75 per cent, its five-month term deposit rate is down by 20 basis points to 2.75%, and all other term deposit rates of between six to nine months have been reduced by 10 basis points to 3.05 per cent.

Westpac's 32-day notice saver interest rate has been reduced by 25 basis points to 2.40 per cent.

Finally, base interest for 'Online Bonus Saver' and 'Online Bonus Saver PIE' remains at 0.10 per cent. Bonus interest on both products has been reduced by 15 basis points to 1.75 per cent, giving a potential return of 1.85 per cent.

- This story was updated with additional information after publication.