Three banks chop their mortgage rates

Three banks have cut mortgage rates in response to Reserve Bank Governor Alan Bollard's surprise 0.5 per cent cut in the official cash rate yesterday.

State-owned Kiwibank moved first, cutting all its home lending rates. Westpac then reduced its variable mortgage rate by 0.5 per cent to 10.45 per cent. ASB Bank cut its floating rate to 10.25 per cent.

"We appear to have passed the peak of very high interest rates and we now have the opportunity to pass on some genuine savings to homeowners," Kiwibank chief executive Sam Knowles said.

Westpac did not cut its fixed mortgage rates and said "there will be other changes to various deposit rates". The change to its variable rate will be implemented on Monday for new customers and after a rate change notification process for existing customers.

ASB also dropped its fixed home lending rates, the 12-month rate now sitting at 8.95 per cent and the two-year rate at 8.90 per cent. ANZ-National and the BNZ made no change but were "reviewing rates".