Photo: RNZ / Marika Khabazi
Kiwibank is cutting the interest rate it charges on its shorter-term home loan fixes.
The six-month special rate drops from Tuesday from 6.15 percent to 5.99 percent while the one-year drops from 5.79 percent to 5.55 percent.
Kiwibank's two-year special drops from 5.59 percent to 5.45 percent.
Those rates are available to borrowers with at least 20 percent equity.
The one-year rate for people who do not qualify will drop from 6.69 percent to 6.45 percent.
Earlier, commentators told RNZ the current situation still could not be described as a mortgage war, even though the banks are cutting rates.
It was a response simply to lower funding costs, Opes Partners economist Ed McKnight said.
"It's costing the banks less to borrow from other people and lend out mortgages. So they are passing these cost savings on.
"If there was a mortgage war you would expect to see falling bank profitability. In other words, banks would be accepting a lower margin in order to gain market share. But, they are not doing this. According to the latest Reserve Bank data the banks are preserving their margins.
"Even as interest rates fell from January to September last year, ASB, ANZ, BNZ and Westpac maintained their net interest margin… ASB and Westpac grew their margins ever so slightly. In fact, all major banks have grown their net interest margin since a few years ago."
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