National Bank and ANZ announced cuts in their fixed mortgage rates on Wednesday night right across the range from 6 months to 5 years, joining similar cuts announced in the last week by KiwiBank, Westpac, ASB and TSB.
BNZ followed up with cuts of 10 to 60 basis points across their range of fixed mortgage rates on Thursday afternoon.
National and ANZ cut their 6 month rate to 5.75% and its 1 year rate to 5.79%. It set its 18 month rate at 5.99% and its 2 year rate at 6.09%.
They cut their three year, four year and five year fixed mortgage rates to 6.45%, 6.85% and 7.25% respectively.
However, National left its main floating rate on hold at 5.74%, below its fixed rates. ANZ also left its floating rate unchanged.
Most borrowers are still choosing to float rather than fix with the Reserve Bank expected to leave the Official Cash Rate, which has been the base for floating rates, on hold until the middle of next year.
Meanwhile, BNZ has introduced a 30 month fixed-term rate of 6.10%. It cut its 18 month Classic home loan rate to 5.99% from 6.20% and cut its 4 year rate by 60 basis points to 6.85%. It left its TotalMoney variable home loan rate unchanged at 5.59%.
Most economists expect the OCR to be raised from the current record low of 2.5% from mid 2012 to around 4% in the following two years, implying a rise in floating rates of around 1.5% points over the same period. However, those forecasts rely on a rebound in economic growth in New Zealand, thanks largely to a successful Christchurch earthquake rebuild, and only a mild downturn in the global economy.
A slower Christchurch earthquake rebuild and slide into recession globally could see the OCR stay lower further into 2012, or even fall. Reserve Bank Governor Alan Bollard has said there is room to cut the OCR if necessary.
(Update adds BNZ's new 30 month rate, cuts to all BNZ's fixed rates).