Banks have started dropping their mortgage rates after the Reserve Bank cut the Official Cash Rate from 3.25% to 3%.

Westpac cut both its fixed-term and floating mortgage lending rates after today’s announcement.

It trimmed four basis points (bps) off its one-year, 18-month and three-year fixed-term special rates and 20bps off its two-year rate.

Its one-year, 18-month and two-year special rates are now 4.75% – a new low for the mortgage rate market, while its three-year rate dropped 30bps to 5.09%.

Westpac NZ’s managing director of product, sustainability and marketing, Sarah Hearn, said: “We know cost pressures continue to weigh on many households and businesses, and we’re acting swiftly to pass on lower rates for borrowers.

“Our consistent offer of 4.75% per annum across the one-year, 18-month and two-year home loan terms will appeal to customers looking to split their loans across different terms, given the changing outlook for the OCR [Official Cash Rate].”

Before the OCR cut, major banks had dropped their one-year mortgage rates to 4.79%.

Westpac, ANZ and Kiwibank also dropped their flexible and floating lending rates, but only by 20bps.

ANZ cut its floating mortgage rate and business flexible loan rate to 6.29%.

It also cut 25bps off its standard rate serious saver account, dropping it to 0.40%, and shaved 10bps off its online savings account and Pie (portfolio investment entity) fund.

“When reviewing interest rates, ANZ considers a range of factors, including the OCR, changes in wholesale interest rates and the need to balance the needs of borrowers and savers,” ANZ said.

Meanwhile, Kiwibank dropped its variable home loan rates by 20 bps to 6.15% and its revolving loan to 6.30%.

The bank also cut its 90-day notice saver rate by 25bps to 2.85% and its 32-day notice saver rate to 2.3%.

Westpac’s 60-day term deposit was cut to 2.25%, down 15bps. Its 90-day rate is down to 3.40%, a drop of 5bps, and its four-month rate is 3.35%, down 10bps. The eight-month term rate is 3.80%, down 10bps. These will be effective on Friday.

Hearn said it also knew savers were watching falling rates closely.

“By not passing on any of today’s 0.25% rate cut on our Notice Saver product, we’re keeping the rate at 3.00% pa, which we believe offers great value for customers who don’t need on-call access to their savings.

“While we know families and businesses are still feeling the effects of high living costs and economic uncertainty, we expect cost pressures to ease over the rest of the year.”

Raphael Franks is an Auckland-based reporter who covers business, breaking news and local stories from Tāmaki Makaurau. He joined the Herald as a Te Rito cadet in 2022.