ANZ Managing Director Retail and Business Banking Antonia Watson said the timing of the rate drop was tied to the traditional spring warming of the housing market.
Property sales were generally higher from November and Watson said the rate would only be available until early December.
"While the froth has come off the top of house sales, particularly in Auckland, there is still strong demand for homes," Ms Watson said.
"The economy is also going strong - inflation and unemployment is low, there's growth in the provinces and tourism is booming."
Barfoot and Thompson's managing director Peter Thompson said October had seen a boost in the Auckland residential property market.
There had been more sales, higher selling prices and new listings, he said.
"In comparison with where the market has been for the past nine months, October trading was extremely active," he said.
The average sales price for the month at $937,277 was the highest this year and up 1.5 per cent on the average for the previous three months.
Along with the property market, Watson said ANZ's interest rate drop was driven by New Zealand's low cash and inflation rate and growing confidence in the economy.
Although the latest offer isn't the first below 4 per cent - it has been the lowest from one of the major banks.
In August Kiwibank toyed with lower rates, temporarily dropping its one year rate to 3.99 per cent.
HSBC Premier is offering a 3.85 per cent rate for 12 and 18 months and SBS Bank has a 3.95 per cent two year rate special.
ANZ's fixed two-year rates will also drop tomorrow – down from 4.35 per cent p.a. to 4.29 per cent p.a.
John Bolton from Squirrel said it wasn't surprising to see a lower rate from a major bank.
"The rates we negotiate with banks are nearly there so it is not a big move for them to go below 4 per cent," he said.
Bolton urged homeowners to do their research when it came to chasing lower rates.
"With the lower rates the banks won't do cashbacks with it, it will be a short term and for a limited time."
He said it was often better to go with a longer term, slightly higher rate, if a cashback was offered.
"I wouldn't get too excited about the rates in isolation," he said.
"If you can get a 4.39 per cent for three years with a $3-4k cashback offer, that's the equivalent of getting a 4.1 per cent for three years."
Bolton advised those who did secure a lower rate to keep up with previous repayments.
"Pay extra on your mortgage because the rate is always going to go up again."
The limited time special rates will run from Sunday November 11 to Sunday
December 2, available for home loan customers with a minimum 20 per cent equity.
• 1-year special rate from 4.15 per cent p.a. to 3.95 per cent p.a.
• 2-year special rate from 4.35 per cent p.a. to 4.29 per cent p.a.
