2.25% one year rate from the Co-op

The banking group launches its 2.25% rate on October 21 exclusively for first home buyers.

It is the cheapest traditional bank loan in the market, and second cheapest behind Heartland's digital-only 1.99% offer. 

The deal, which marks an aggressive play for the FHB market, is just as cheap as KiwiSaver provider Simplicity's floating rate, which is available to the investment firm's existing customers through a ballot system. 

The Co-operative's new loan is available to people buying a home they intend to live in.

Most buyers must have a minimum 20% deposit, but the offer is also available for those who qualify for Kāinga Ora First Home Loans, which need a 5% deposit.

Borrowers will need to take out a loan of $200,000 or more to qualify for the deal. 

The loan represents a significant price cut for The Co-operative, which offers a standard one year rate of 2.55%, level with the big four, Kiwibank and SBS. 

The bank, led by David Cunningham (pictured), recently cut four year fixed loans to 2.89%, and five year to 2.99%. 

The new loan comes as first home buyers take an increasingly large slice of the property market since Covid. 

First timers borrowed $1.3 billion in August, the highest volume on record, based on RBNZ figures dating back to 2014.