Banks' cut two-year fixed mortgage rates as swap rates drop

The National Bank, sister bank ANZ, TSB, Westpac and BNZ have all followed Kiwibank in cutting their two-year fixed mortgage rates and ASB is expected to follow.

BNZ cut its two-year rate to 6.99% from 7.30% on Friday evening. Westpac cut its rate from 7.20% to 6.99% on Thursday afternoon, matching Kiwibank's cut Thursday morning to 6.99% from 7.30%.

The National Bank cut its two-year rate to 6.99% from 7.20% and ANZ cuts its to 7% from 7.30% on Thursday evening. The two also cut their three, for and five year fixed rates with ANZ dropping its five-year rate by 74 basis points to 7.75% and the National Bank reducing its five -year rate by 71 basis points to 7.79%.

Westpac also cut longer-term rates, with its five-year rate reduced by 75 basis points to 7.75% and BNZ trimmed its five-year rate by 69 basis points to 7.8%.

And among a series of rate changes, TSB dropped its two-year fixed rate to 6.95% on Friday from 7.19%.

Meanwhile, AMP cut its two-year, three-year and 18 month rates but lifted its six month rate. And HSBC increased its two-year fixed rate to 6.74% from 6.4%.

Despite the reductions to two-year rates, they're still well above the major banks' variable rates with some of these below 6%.See all bank mortgage rates here.

The cuts to fixed rates come as long-term swap rates fall. See our chart below.

State owned Kiwibank, the first to cut two-year fixed rates, said the move was designed to provide some certainty to customers concerned about interest rate volatility.

 “This is another option for home loan customers looking to lock in very competitive rates and to spread their lending risk,“Kiwibank CEO Sam Knowles said.

The cuts come after the Reserve Bank lifted the Official Cash Rate by 25 basis points to 2.75% last month, its first hike in almost three years. That move initially set off a series of rate hikes from the major banks largely in their floating, six month and one-year rates.