Homeowners coming off a fixed-term mortgage in the next two months should pre-book a low rate to grab them while they last, says a broker.

A mortgage-rate war has broken out among the major banks after ANZ announced a record-low rate of 3.95 per cent fixed for one year on Saturday - the lowest rate by a major bank in New Zealand since just after World War II.

That has since been matched by Westpac and ASB, while BNZ is offering a two-year fixed-term rate of 3.99 per cent.

Karen Tatterson, a mortgage broker with Loan Market, said most people on a fixed-term mortgage would either be the same or worse off by the time they paid the break fee if they tried to switch to the lower rate.

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But those with less than 60 days to go on their fixed term would have the most to gain from the lower interest rates.

"If you are close [to the end of your fixed term] it is worth having a look."

She said most banks would allow people who had less than 60 days to go to pre-book the low rate even if the special was due to end before their fixed term was up.

Those tempted by the lower rates should contact their bank or mortgage broker to find out how much it will cost to break their fixed term.

But they should be prepared to make a quick decision. The quoted cost is only valid for that day.

A mortgage calculator on a bank website or www.sorted.org.nz can then be used to work out how much the repayments would be on the lower interest rate and whether the savings make it worth it.

Tatterson also urged people to be cautious about cash-back deals.

ANZ is offering a $3000 cash-back incentive for customers who take out a new home loan and commit to keeping their mortgage with ANZ for three years.

She said switching banks typically involved a refinancing legal cost of $1200 to $1500 which needed to be taken into account.

Those who take up the ANZ cash-back deal also need to be aware that if they switch banks within three years they will be liable to pay the sum back to the bank.

Tatterson said that was the first time she had seen a claw-back policy on a cash-back and it was aimed at discouraging people from switching banks regularly.