Westpac has followed ANZ Bank and dropped its one-year fixed home loan rate to 2.79 per cent.

ANZ made the same move yesterday, calling its new rate "well beyond historic lows" and Westpac announced it would follow suit this evening.

Other major banks dropped below 3 per cent for the first time as the mortgage competition continues to bring in new customers amid the Covid-19 pandemic.

The fresh round of home loan rate reductions follows Reserve Bank Deputy Governor Geoff Bascand's comments on Monday that the central bank's bond buying efforts had so far been effective in reducing wholesale interest rates, but that they were not translating quickly enough into lower mortgage rates.

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"We have seen some banks reduce their mortgage rates but we still think that there is a way to go," he told the Herald.

Westpac's new rates, available from Monday, will drop fixed home loan rates drop from the current 3.05 per cent. Its two-year fixed home loan rate will also drop to 2.79 per cent from 2.99 per cent.

Yesterday, Ben Kelleher, ANZ managing director retail and business banking, said the new rates put more money in the pockets of customers.

"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."

No decision had been made on how long the rate would be available, but it would largely depend on market conditions.

"As always, we will be working hard to balance the needs to borrowers and savers in setting new deposit rates, although this is challenging in the current low-interest-rate environment," Kelleher said.

On May 11, ANZ slashed its one-year fixed rate to 2.99 per cent, following Kiwibank and ASB dropping below 3 per cent.

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