Bank of China makes the first fixed mortgage rate cuts since the October 8 OCR cut. Will this induce the main banks to move too?

Following the October 8 Official Cash Rate (OCR) cut, one challenger bank, the Bank of China, has dropped rates sharply across all fixed terms. It now has the most competitive rate card of any bank. Only TSB's 4.49% two-year rate is lower than the equivalent Bank of China fixed rate.

Otherwise they have the market leading position, and compared to the main mortgage banks, by up to 20 basis points (bps).

Timing is everything, so to assess how the main banks have changed their one year fixed rates in response to Reserve Bank (RBNZ) moves, it is best to look at this over a longish period.

Competitive responses are fluid, and just assessing on specific dates doesn't give the whole picture. But for 2025 so far, it is clear one-year fixed rates have lagged OCR reductions. But they have fallen more than the wholesale swap rate over the same period.

Since October 9, swap rates have not changed much at all. So you might think while there is downside potential to one-year fixed rates, that might only come if wholesale money costs reduce.

But then there is competitive pressure.

On Tuesday, the Bank of China dropped its fixed rates, with its one-year fixed rate dropping to 4.28%. That is 20 bps lower than all the main mortgage banks at this time.

At the start of the year, the differential between the one-year swap rate and one-year carded mortgage rates was 222 bps. Now it is 208 bps. Actual negotiated rates may take this down to between 190 bps to 200 bps. While that is probably in the banks' general comfort zone, they will resist it going much lower without competitive pressure.

They may not actually feel the pressure from the Bank of China move. But if one of the five big banks (ANZ, ASB, BNZ Westpac and Kiwibank) moves, they will likely all have to move.

The last time one-year fixed rates were as low as 4.28% was when Heartland had a similar rate in mid-June 2022. The main banks had them this low in April 2022 when they were moving up from earlier when rates started in the 3% range.

The RBNZ's loosened loan-to-value ratio restrictions will give banks a slightly larger playing field, but it may not be substantially larger. First home buyers who are ready to buy are already moving - they are doing more than a quarter of the mortgage transactions anyway. And it is doubtful banks will want to build their mortgage books with existing homeowners trying to raise their leverage by using their houses as an ATM. It is likely also that homeowners will stay motivated to pay down their mortgages faster than the scheduled repayments, as they have been doing for a long time now. Nothing focuses the mind in household budgeting if job security is a worry.

To compare mortgage rate offers in a way that includes the application and account fees costs (or break fee costs if you need to do that), and applying the impact of a cashback/legal fee reimbursement/ or other incentive, you can now use our new home loan comparison calculator. You can find it here. Or, for convenience, we have added it to the bottom of this article.

We sense the ability to achieve meaningful discounts from carded rates is now much harder, so the impact of the incentives offered are currently playing an outsized role. Reader-reported mortgage rates are welcome. So please record them if you have them in the comment section below, which helps us stay on top of this aspect of the home loan rates market.

And still negotiate. How flexible banks may be will depend on the strength of your financials.

One useful way to make sense of the changed home loan rates is to use our full-function mortgage calculator which is below.

And if you already have a fixed term mortgage that is not up for renewal at this time, our break fee calculator may help you assess your options. Break fees will be minimal in a rising market. But they become important in a falling market, like now.

Here is the snapshot of the lowest advertised fixed-term mortgage rates on offer from the key retail banks at the moment.

Fixed, below 80% LVR	6 mths	1 yr	18 mth	2 yrs	3 yrs	4 yrs	5 yrs
as at October 14, 2025	%	%	%	%	%	%	%
ANZ	4.89	4.49	4.59	4.65	4.89	5.49	5.49
	4.95	4.49	4.49	4.65	4.94	5.19	5.39
	4.89	4.49	4.49	4.65	4.85	5.09	5.39
	4.85	4.49		4.69	4.99	5.39	5.59
	4.99	4.49	4.49	4.65	4.85	4.99	4.99
Bank of China	4.68 -0.30	4.28 -0.40	4.38 -0.30	4.58 -0.20	4.78 -0.10	4.95 -0.40	4.95 -0.10
China Construction Bank	4.99	4.75	4.75	4.75	4.95	5.99	5.99
Co-operative Bank (*=FHB only)	4.85	4.39*	4.59	4.69	4.94	5.19	5.39
ICBC	4.85	4.45	4.55	4.59	4.89	5.35	5.39
(*=FHB only)	4.99	3.99*	4.49	4.65	4.85	4.99	4.99
	4.99	4.49	4.75	4.49	4.89	5.19	5.39