Several of Kiwibank's rivals have followed the state-owned bank's lead and cut a key home loan rate.
On Thursday morning Kiwibank cut its two-year rate from the market average of 7.3% to 6.99%. By the afternoon National Bank and Westpac had matched that, while ANZ almost did, with a new rate of 7%.
ANZ and National also cut rates for three-, four- and five-year mortgages.
Most banks increased floating and short-term fixed rates after the Reserve Bank raised the Official Cash Rate last month but the costs of borrowing on the money markets have fallen in recent days.