All the major banks in New Zealand have now dropped their mortgage rates, ahead of an expected Reserve Bank interest rate cut in December.
The move will make home buying more affordable, especially as houses prices are tipped to keep falling. Figures released by economics at Infometrics earlier this week predicted that prices will keep falling for at least the next quarter.
Westpac and Kiwibank set the ball rolling on Thursday, but all other major banks have now also lowered lending rates.
The Bank of New Zealand dropped all of its variable rates to 8.99% and 8.29%.
ANZ's two floating rates are now 8.7% and 8.5%, while National Bank's floating rates now sit at 8.95% and 8.7%.
ASB cut its floating rate from 9.45% to 8.7%. It also dropped fixed rates, with a six-month term falling to 7.35%, while its one-year rate is now 7.4%.
The bank says the rates take effect immediately for new borrowers and come into force on existing mortgages on 8 December.
On Thursday, Kiwibank cut its home loan rates by up to three quarters of a percent to 7.95% and reduced its fixed rates by varying amounts.
Westpac cut the cost of borrowing by three quarters of a percent on most of its lending products, including floating and fixed-home loans, business and farming lending rates and credit cards.
Westpac's floating rate is now 8.7% and the two-year fixed lending rate is 7.35%. Westpac says the large reduction follows falls in wholesale rates, which is the rate at which it borrows money offshore.
Banking union Finsec welcomed the cuts, but says banks could be doing more to help customers, including reducing account and lending fees and passing on interest cuts quickly.
Reserve Bank expected to cut rates again
Some economists expect the Reserve Bank to cut rates by at least 0.75 percentage points at its next official review on 4 December, while Deutsche Bank on Friday predicted a cut of 150 basis points.
The Official Cash Rate is currently 6.5%.
Deutsche Bank economist Darren Gibbs told Checkpoint such a large cut is aggressive but would not be surprising, given the global credit crunch.
Mr Gibbs says in the current enviroment a large cut is needed and he would like to see the benchmark rate lowered to 5%.
He considers the world markets to be in worse shape now than during the 1997 Asian crisis and are need of a sharp shock.
The Official Cash Rate was previously 8.25% until it was lowered to 8% on 24 July, then 7.5% on 11 September and lowered again to 6.5% on 23 October.