Mortgage wars: ANZ matches record-low Westpac interest rate

ANZ has matched Westpac's low mortgage rate. Photo / Michael Craig

Competition in the home loan market has stepped up a notch again with ANZ moving to match rival Westpac.

The country's largest bank has dropped its one-year fixed-term mortgage rate to 2.29 per cent - a rate which Westpac began offering on January 11.

Other major banks are likely to follow suit or at least match the rate if asked even if they don't change their publicly advertised rates.

The 2.29 per cent rate is the lowest for the major banks but other banks are still cheaper.

Heartland Bank is still the cheapest, according to interest.co.nz, with a rate of 1.99 per cent fixed over one year.

HSBC is also lower than the majors with a rate of 2.25 per cent.

But there are conditions attached to get the low rates.

Those wanting to nab the ANZ rate must have 20 per cent minimum equity and an ANZ transaction account which their salary is direct-credited into.

The special is also not available with package discount offers.

Westpac's rate is only available to customers with 20 per cent equity in owner-occupied homes.

While low-interest rates can be appealing, homeowners are advised to first check with their bank or mortgage broker to find out if the associated break fees make the savings worthwhile.

The low rates currently on the market come at a time of growing concern about the state of the property market in New Zealand.

REINZ data showed Auckland median house prices hit $1 million for the first time in October last year, and the national median shot up 19.8 per cent from $605,000 last year to $725,000.

And those high prices have done little to dampen buyer enthusiasm as, in November, the highest number of houses were sold since March 2007.

Economists are now predicted that house prices could rise by as much as 13 to 16 per cent in the next few months.

This will only put further pressure on the many Kiwis currently locked out of the housing market with home ownership rates at the lowest level since 1951.

Rapidly increasing house prices also have repercussions for those on the property ladder, with data from credit agency Centrix showing that nearly one in five over-65s still have a mortgage.