Westpac has heaped pressure on its competitors and dropped its one-year fixed mortgage rate to 2.29 per cent - the lowest amongst the four major banks in New Zealand.

There is, however, a catch in that the special rate is only available on a one-year fixed term for customers with 20 per cent equity in owner-occupied homes.

The Umbrella Company mortgage advisor Sara Hartigan told Tim Dower it is a bold move by Westpac.

"They also know there's a lot of people out there that have new years resolutions to get into the housing market, so I think its a bit of prompt to get people to start thinking about purchasing a house."

Hartigan says for people on rates of three or four percent, it is worth looking at what your break fee is, and what your net gain on a lower rate will be.

She says one client saved close to ten thousand dollars a year.

"The other banks probably will follow, they tend to always do... are we going under two per cent? I feel that there is a high likelihood that we could."