ASB's three year rate is now 3.95%, its four year rate 4.35%, and five year rate 4.45%. The latter rate marks a drop of 69 basis points, as lenders make bets on rates staying lower for longer.
The move is likely to push its big four rivals to make a move, with smaller bank TSB pledging to match its latest offer through its price-match promotion.
While ASB's long term rates are creeping down, the bank has bumped up its 12 month offerings. Its one year and one year special are priced at 4.49% and 4.09% respectively.
Nevertheless, long term rates and short term rates are edging down across the market. Co-op Bank cut its one year rate to 3.99% this week, while SBS cut its two year rate to 3.99%.
Meanwhile, BNZ reacted late on Thursday by cutting its three year rate to 3.95%, matching ASB. BNZ's offer comes into effect tomorrow.
ASB Senior Economist Jane Turner, (pictured) told TMM Online that borrowers can expect low rates for a "reasonable amount of time", through 2019 and into 2020. She predicts the Reserve Bank's capital adequacy rules will see mortgage rates eventually rise, but said this would be "very gradual".
Turner added: "We don't think interest rates will remain low and people should plan for a higher rate environment. In the meantime, we expect low rates to give the economy the extra kick it needs."
ASB's move follows Kiwibank's decision to cut its five year rate to 4.29% in the wake of the Reserve Bank's move to an OCR easing bias. Sovereign's five year special at 4.45% is the next best price on offer, alongside ASB's.
Headwinds in the domestic and global economy are likely to see the central bank cut rates in May and August, according to the pricing of wholesale interest rate markets. Gloomy business confidence figures this week further add to the expectation of an imminent OCR cut, economists said.
Take a look at what's on offer in the market here.