Kiwibank has cut mortgage and deposit rates, dropping the key two-year fixed rate to 5.59% from 5.69%, for those with more than 20% equity.

The two-year standard rate has also dropped 10 basis points (bps) to 6.49%. The bank has dropped its six-month special rate to 6.15% from 6.49%.

Across the board, it has dropped rates between 10 and 20bps but has left the one-year rate unchanged at 5.79% (special).

Term deposit rates have also been dropped between 0.5 and 20bps.

The move follows other banks, which have continued to move most fixed rates lower since the Reserve Bank cut the Official Cash Rate by 50bps in late November.

While floating rates moved quickly to match the OCR cut, fixed rates have been slower to come down, with banks citing international borrowing costs as a factor.

Last week, ASB lowered its fixed mortgage rates, bringing them in line with other major banks.

The bank announced cuts of between 10 and 20bps to its six-month to three-year lending terms.

ASB’s one-year fixed-term home loan rate will drop 20bps from 5.99% to 5.79%.

Its six-month and two-year fixed rates also fall 20bps, to 6.19% and 5.49% respectively.

The bank’s three-year fixed home loan rate is being cut by 10bps to 5.59%.

Reserve Bank governor Adrian Orr tempered expectations around mortgage cuts last month, noting “other global influences going on” as a reason for interest rates not necessarily falling in line with the OCR.

Other factors, such as banks already pricing in OCR cuts, should calm overly enthused borrowers.

In reality, OCR changes have never translated one-for-one to mortgage rate changes across all terms, with the OCR more directly influencing floating rates and those for loans fixed at shorter terms.

Many of the major banks were quick to pass on the full 50bps to customers on floating rates last Wednesday.

The OCR also isn’t the only thing that influences the interest rates consumers and businesses pay.

Geopolitical factors can put upward pressure on the interest rates banks pay to borrow money from international money markets and then on-lend to Kiwis.

Lately, this pressure has revolved around Donald Trump following his win in the US presidential election in November.

Investors believe the tax cuts the president-elect has promised to deliver in the US will result in the country’s books sinking further into the red.