ASB, BNZ, Kiwibank slash rates

ASB and BNZ announced their changes on Friday morning, with the new rates effective immediately. 

BNZ has also cut its two year classic home loan to 2.59%, level with ASB and SBS. 

BNZ's standard one year is available at 2.89%, and standard two year at 3.19%.

Kiwibank has announced a one year special at 2.35%, slightly more pricey than its bigger rivals. Its standard one year drops to 3.2%, with changes effective on Monday. 

Shorter term rates continue to drop in 2021, despite economists' predictions that the official cash rate will no longer fall to negative territory. 

With the Reserve Bank's Funding for Lending Programme, downward pressure on interest rates is likely to continue in the first part of the year. 

ASB, BNZ, ANZ and Westpac now all offer the same 2.29% one year special rate, but the Kāinga Ora First Home Loan special (2.25%), HSBC Premier (2.25%), and Heartland's online mortgage (1.99%), remain cheaper, albeit with conditions attached. 

As shorter term rates keep falling, economist Tony Alexander believes there's "nothing of immediate import to suggest that borrowing costs facing home buyers will be rising in the near future".

In his latest market update, Tony Alexander said the RBNZ would want to "get the pace of economic growth cracking along by making money cheap and encouraging people to borrow and spend".