Banks are dropping mortgage rates and offering cash sweeteners, loaded credit cards, payment of legal fees and tablet computers as they go to war for customers.

High on their target list are disillusioned National Bank customers, whose bank is to be merged with the ANZ, which owns both brands.

The TSB Bank is running an advertisement that asks: "How do you tell your new bank what you think of their behaviour? Make them your old bank."

The ad offers a two-year fixed rate of 5.3 per cent, $1000 towards legal fees, no application costs and a Visa card loaded with $500.


On Tuesday, the ASB reduced its two-year fixed home loan rate from 5.45 per cent to 5.25, saying it was the lowest unrestricted rate available.

The rate was offered regardless of the customer's loan-to-value ratio, and with a free Samsung Galaxy tablet and up to $1000 cash thrown in.

Last week, Kiwibank cut its six-month, one-year and two-year home loan rates to 4.99 per cent, although the bank requires 30 per cent or more equity in the property to qualify. editor Bernard Hickey said the bank enticements were aggressive and competitive.

"The banks are offering 95 per cent home loans, they are reducing their credit standards on some types of lending and ANZ has been very aggressive in the last six months encouraging people to borrow," he said.

"Some banks are paying break fees, sign-on bonuses and legal fees. They are back to their old tricks but still have a few up their sleeves."

In an poll of 850 people yesterday, 45 per cent said they would consider moving to other banks, although Mr Hickey did not know how many respondents were National Bank customers.

He said previous takeovers of New Zealand banks had resulted in about a 40 per cent loss of customers to other banks.


Mortgage adviser Bruce Patten said it was too early to tell if ANZ/ National's competitors had gained customers as a result of the merger.

'We have found that most people accepted they were part of the ANZ anyway."

The shift from National to the ANZ brand would not change anything from the clients' perspective.

"We haven't seen a rush of clients saying, 'I want to go because I don't want to be with ANZ'," Mr Patten said.

But Kiwibank communications manager Bruce Thompson said a "disproportionate number" of National Bank customers were now taking up its two-year fixed rate.

"Whether they are switching because they are disaffected or whether they are switching because the rate is attractive we don't know because we don't ask. What we can say is we are the beneficiary of the unrest."


Mr Thompson would not reveal the number of people switching, but said it was significant.

Bank of New Zealand spokesman Thor Bostelmann said his company had received interest from National customers.