A second major bank slices 20 bps off a key mortgage rate as wholesale money costs fall to near record lows. But it ends its 3 year 'special'

Westpac has today joined two other banks offering a 4.19% two year 'special' mortgage rate.

That involves a -20 bps cut in their previous 'special' for that term.

At the same time they have ended their 4.80% three year 'special', reverting to the standard 4.99% rate.

The new Westpac two year 'special' lines them up with TSB Bank who adopted the rate first, and ASB, who dropped to the same rate last week.

For the 2 year term, these three banks now have a +16 bps advantage over ANZ at carded rates, who have the largest mortgage book in New Zealand. 4.35% is ANZ's lowest carded rate of any term they offer.

The lowest carded rate offered by any bank for any term is by SBS Bank who offer 4.10% for a fixed one year term. HSBC have announced the end of their 3.95% 18 month rate and borrowers will need to make their deal with them by May 20, and draw down by the end of the month if they wish to capture that unique rate.

Behind the scenes, wholesale swap rates remain near record lows. Most of the declines in this wholesale funding has not yet been passed on in mortgage rate offers (or taken from term deposit offers) - yet.

Banks are somewhat constrained by their core funding ratio obligations. They also claim that swap spreads 'are high', adding to their wholesale costs. 

Here is where fixed rates stand after today's Westpac changes:

below 80% LVR	1 yr	18mth	2 yrs	3 yrs	4 yrs	5 yrs
	%	%	%	%	%	%
	4.25	4.89	4.35	4.99	5.20	5.30
	4.25	4.25	4.19	4.65	5.00	5.15
	4.25	4.99	4.39	4.64	4.99	5.15
	4.29		4.25	4.75	4.90	4.99
	4.25	4.95	4.19	4.99	5.09	5.19
	4.25	4.35	4.35	4.65	4.89	4.99
	4.25	3.95	4.39	4.59	4.79	4.99
	4.10	4.35	4.29	4.65		4.99
	4.35	4.35	4.19	4.79	5.35	5.35

In addition, BNZ has a fixed seven year rate of 5.55%, while TSB Bank offers a fixed ten year rate at 5.75%.