Kiwibank sets up loan war with rate cut

Kiwibank has dropped it's home loan rate to be the lowest of the main 5 banks. Photo / Supplied

Kiwibank has fired the first shot of the year by dropping its one-year fixed home loan rate to 6.15 per cent and it is not clear whether the other banks will fire back.

ANZ, BNZ, ASB and the National Bank declined to say whether they would match the rate. They all said their rates were competitive and were constantly under review.

Kiwibank has dropped its rate from 6.45 per cent for an unspecified period.

Spokesman Bruce Thompson said the bank would not say how long the deal would be available but it would run at least until the end of this month.

"It's been some time since there has been any significant changes to interest rates.

"So Kiwibank is testing the market with a cut-rate one year offer.

"We are looking to kick-start the New Year with a very attractive mortgage rate."

Thompson said the move was a marketing pitch and the bank was always looking to surprise and lead the market.

People traditionally re-evaluated decisions in January and which bank they wanted to be with, and Kiwibank wanted to be on the shopping list.

Thompson said the bank did not have any capital constraints and was in a good position to take on more customers.

"We have got sufficient funds and we are looking for growth. We currently have 8 per cent of the [home loan] market and are looking to grow that.

"We don't know what the other banks will do. A few years ago they ignored us, but I don't think they ignore us any more. They might follow us [by dropping their rates] but Kiwibank is leading."

Economists do not expect the Reserve Bank to raise the official cash rate - currently at 3 per cent - for several months with many picking it will be September before rates rise again.

HOW THEY STAND
One-year fixed home loan rates*:

* Kiwibank: 6.15 per cent

* National Bank: 6.45 per cent

* BNZ: 6.45 per cent

* ANZ: 6.45 per cent

* ASB: 6.45 per cent

* Banks say they do offer rates below the standard one-year home loan rate of 6.45 per cent depending on specific criteria.