Kiwibank is the latest bank to drop its mortgage rates this week amid a scramble to win customers.

The state-owned bank, and the fifth-largest in the country, is lowering all of its “special” and “standard” fixed lending rates.

From Thursday, Kiwibank’s one-year fixed rate will fall 30 basis points (bps) to 6.45% (special) and 7.35% (standard).

Kiwibank’s two to five-year special fixed-term home loan rates will all drop to sub 6%.

Its two-year rate falls from 6.34% to 5.99% (special) and 7.24% to 6.89% (standard).

Kiwibank’s special rates are only available to those with a minimum 20% equity or First Home Loan customers.

Yesterday, BNZ said it was moving to a single set of home loan fixed interest rates, rather than charging first-home buyers and other low-equity borrowers a higher interest rate.

The bank also cut its one-year rate to 6.55%.

On Monday, ANZ announced some of the largest home loan interest rate cuts seen this year.

ANZ’s special one-year rate fell 40bps to 6.45%, while its 18-month special rate was cut by 50bps to 5.99%.

ANZ New Zealand managing director for personal banking Grant Knuckey said it was a “really competitive environment right now”.

“Many people have fixed their home loans on shorter terms in the past few years - meaning those borrowers will soon be in a position to take advantage of lower rates.”

The Co-operative Bank also introduced lower lending rates this week.

The bank’s one-year owner-occupied home loan rate - for those with a minimum 20% equity in the property - dropped 40bps from 6.79% to 6.39%. Its standard rate for the same term length also fell 40bps to 6.89%.

Its 18-month rates were cut by 34bps to 6.15% (owner-occupied) and 6.65% (standard).

Last week, the Reserve Bank cut the official cash rate from 5.5% to 5.25% - the first rate cut since 2020.

The Bank revised its forecast rate track, suggesting the OCR will fall from 5.25% to at least 5% by the end of the year and to at least 4.5% by June next year.

But the prospect of lower interest rates also means lower rates for savers too.

The major banks have also been lowering their term deposit rates lately.

Kiwibank was no different, announcing cuts across all of its interest tiers.

The biggest was a 35bps cut to its two-year term for deposits with both $10,000-plus and those from $5000-9999. For those with more than $10,000, the rate falls from 5.25% to 4.90%.

Three to five-year term deposit terms will drop 30bps.