Rapid fire breaks out in the mortgage wars as combatants each aim at marginally different territory. Borrowers watch as the landscape becomes very fluid very quickly

Update: Bank of China has launched New Zealand's lowest home loan rate of 2.79% fixed for one year. They have also reduced many other rates, including their floating rate.

Now Westpac has announced a 2.99% rate for a two year fixed 'special' home loan rate.

That matches ASB for a two year term.

But Westpac has staked out a competitive position for fixed term rates that are longer than two years, with the lowest fixed rates of any main bank for all terms out to five years.

In fact, Westpac's five year rate is a massive -126 bps lower than the equivalent ANZ rate. And it is -30 bps lower than their closest rivals, ASB and BNZ, for a five year term

The Co-operative Bank has adjusted down as well today, and they have concentrated their fire on the short end. In fact, their new 6 month fixed rate of 3.09% is market-leading for this term. Borrowers who have decided that further reductions are ahead may well think a six month fixed rate at this time is a good idea. 2020 Spring 'specials' may turn out to be when the most competitive market conditions arise as the real estate markets attempts its usual seasonal upturn, and the full effects of the acute phase of the economic crisis are plainer to see, (But of course, new travails could also appear too. The future is never settled.)

Tuesday's changes come rapid-fire after Monday's ANZ (2.99%) and TSB (2.89%) cuts, themselves reactions to ASB and Kiwibank who was the leader in this latest home loan rate dive.

Only BNZ is yet to launch a response in this round, even if it did start with a competitive 3.05% rate for 18 months - a level that now looks ordinary.

Of course, these main bank reductions are not the first banks to go below the 3% benchmark.

HSBC already offers rates as low as 2.95%. Heartland Bank offers a 2.89% rate. And China Construction Bank has the lowest of them all at 2.80%.

All banks are reporting squeezed net interest margins (NIMs) and with matching term deposit rate cuts, banks show they are serious about protecting margin, and that savers are the group paying the price for low borrowing rates for homeowners.

Despite the lower fixed rate offers, there is still no suggestion from any bank that floating rates will be reduced, and it is floating rates that are the basis for SME lending. These borrowers are being quietly passed by.

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Wholesale swap rates have fallen sharply in lockdown although the latest daily shifts have seen that retreat end and a kind of floor may have been found. See the charts here.

Here is the full snapshot of the advertised lowest 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 May 13, 2020	%	%	%	%	%	%	%
ANZ	3.65	2.99	3.20	3.25	3.99	4.75	4.85
	3.89	3.05	3.25	2.99	3.69	3.79	3.89
	4.79	3.09	3.05	3.35	3.69	3.79	3.89
	4.29	2.99		3.39	3.65	3.99	4.09
	4.79	3.05	4.25	2.99	3.39	3.49	3.59
Bank of China [updated]	3.89	2.79	2.89	2.89	3.19	3.79	3.89
Co-operative Bank	3.09	3.09	3.35	3.35	3.69	3.79	3.89
China Construction Bank	4.70	2.80		2.85	3.19	3.30	3.45
Heartland Bank		2.89		2.97	3.39
ICBC	4.29	3.18	3.18	3.18	3.20	3.99	3.99
HSBC	3.64	2.95	2.95	3.09	3.50	3.60	3.70
	3.89	3.09	3.39	3.39	3.69	3.79	3.89
	3.89	2.89	3.35	3.35	3.69	3.79	3.89

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