Kiwibank make the next home loan rate reductions, and its new three year rate stands out as the lowest among their main rivals. ANZ slips further behind the pace

Kiwibank is the next to shift home loan rates down.

They are matching ASB's low 3.39% rate for two years (a -16 bps reduction) and they are going one further for a three year fixed rate 'special'.

For three years, the new Kiwibank 'special rate is 3.65%, a -24 bps reduction.

And at 3.65%, that is the lowest three year fixed rate by any major bank. In fact, it is better than any bank offer for that term except China Construction Bank's 3.19% and ICBC's 3.20%.

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Kiwibank moved its standard rates down by similar amounts, which these days is a bit unusual - other banks have tended to lower 'special' rates recently without matching standard rate reductions.

Kiwibank has also trimmed its standout six month term deposit 2.80% rate by -10 bps, taking it back to 2.70%. That is still a good rate, but not a standout.

After these changes, 3.39% is the lowest rate offer ...

- for a one year term, at Westpac,

- for an 18 month term, at BNZ,

- for a two year term, at both ASB and now Kiwibank.

It is noticeable that ANZ is slipping behind the market shifts down for all main fixed terms other than their six month and one year offer.

Among all main banks, only ASB has its whole rate card for fixed home loan 'specials' below 4% . All the other banks have some options above 4%.

Low mortgage rates are putting pressure on banks to trim their term deposit offers to savers. Customer deposits supply the majority of bank funding. But banks are constrained on both the TD and mortgage front by their core funding obligations to their regulator, the Reserve Bank.

Also falling are wholesale interest rates. These funds are the source of less than a third of bank funding, but the very low rates here for banks that use wholesale funding (the main banks mostly) are driving down what they can offer.

Here is the full snapshot of the advertised fixed-term rates on offer from the key retail banks.

Fixed, below 80% LVR	6 mths	1 yr	18 mth	2 yrs	3 yrs	4 yrs	5 yrs
as at March 14, 2020	%	%	%	%	%	%	%
ANZ	3.65	3.45	3.49	3.65	3.99	4.75	4.85
	3.89	3.45	3.75	3.39	3.69	3.79	3.89
	4.79	3.49	3.39	3.55	3.69	3.79	3.89
	4.29	3.45		3.39	3.65	3.99	4.09
	4.79	3.39	4.25	3.55	3.69	3.79	3.89
Bank of China	5.15	5.25		5.35	5.50	5.70	5.99
Co-operative Bank	3.49	3.49	3.59	3.59	3.89	3.99	4.09
China Construction Bank	4.70	3.15		3.15	3.19	3.30	3.45
ICBC	4.29	3.18	3.18	3.18	3.20	3.99	3.99
HSBC	4.19	3.54	3.54	3.20	3.69	3.79	3.89
	4.29	3.39	3.69	3.55	3.89	4.19	4.29
	3.89	3.39	3.55	3.55	3.89	4.45	4.55
Price Match Promise			3.39	3.39	3.69	3.79	3.89

In addition to the above table, BNZ has a unique fixed seven year rate of 5.20%.