The markets are not convinced more OCR rises are coming at the rate the RBNZ forecast in their last Monetary Policy Statement.
The 90 day bank bill rate is now softening, raisng the margin banks earn on floating rates.
Swap rates are also falling, but lenders are not reducing their mortgage rates at the same pace.
Behind these rate falls are an economy that is growing much slower than anticipated, and the largest section of our economy, the housing market, showing increasing signs that low volumes may be about to reverse the slight rise in median prices that have occurred in 2010 so far.
Not only have wholesale interest rates continued their four month falling trend, but yields on Government bonds have also tracked down over this period.
Concerns about the strength of the 'recovery' in the major first-world economies of the US, Japan, and Europe are behind these falls, with investors fleeing equity investments and piling into the perceived safety of sovereign bonds while they wait out the uncertainty.
Expect more reductions in two to five year mortgage rates if housing sale volumes remain low, and if swap rates continue trending down.