By RNZ

A home loan expert believes interest rates on mortgages have peaked at the current level of between 5 and 6 per cent.

Yesterday, ANZ Bank cut the rate on its two-year fixed home loan special from 5.8 per cent to 5.45 per cent.

The Reserve Bank's official cash rate is on a steep climb.

The Official Cash Rate (OCR) was lifted to a six-year high of 2 per cent in May, with the Reserve Bank government forecasting further rises to combat inflation.

Squirrel Mortgages chief executive John Bolton told Morning Report markets were expecting rates to not get as high as they thought two or three months ago. He said it was because of fears of a recession.

"All this bad news that's been flowing into our economy over the last sort of month or so has got reflected in future interest rates."

When asked if the Reserve Bank would take the foot off the throttle, Bolton said fixed rates were already pricing in increases in the OCR.

"It is going to keep going up and the expectation was it was going to go up over 4 per cent and it was going to get there quite quickly, but what's happening is the OCR is still going to increase but it's going to increase slower and probably won't get quite as high."

For mortgage holders, those longer-term rates are sitting around 5.5 to 6 per cent and that's sort of where rates will peak, Bolton said.

"The thought or worry about markets hitting 7 or 8 per cent are completely overrated."