The mortgage rate cutting merry-go-round is in full swing as a third major bank moves to lower its home loan rates. 

Kiwibank said from today it was dropping some of its fixed home loan and term deposit rates ahead of an expected Official Cash Rate (OCR) cut next week. 

The bank’s special one-year fixed mortgage rate will decrease 10 basis points (bps) to 4.79%, matching moves this week by ANZ and BNZ. 

Kiwibank is cutting its special two-year fixed term rate by 6bps to 4.89%. 

The largest drop is a 20bps cut to its six-month special (5.09%) and standard (5.99%) rates. 

Special rates apply to those with a minimum 20% equity and are also available for first home loan customers. 

Kiwibank is also cutting its standard one- and two-year fixed mortgage rates to 5.69% and 5.79% respectively. 

Term deposit rates are being trimmed by between 10-15bps. Its new two-year rate dropped to 3.80%. 

Kiwibank said there was no change to its six-month term deposit, which has a limited-time interest rate offer of 4.10%. 

The Reserve Bank makes its next OCR decision on August 20. 

Market expectations are for a 25bps cut from 3.25% to 3%. 

Since August last year, the OCR has fallen 225bps. 

The Kiwibank economics team said this week the OCR will need to go to 2.5%, eventually. 

Yesterday, the Bank of New Zealand announced it was cutting most of its home lending rates. 

Its one-year and 18-month fixed home loan rates were cut by 10bps to 4.79%, while its two-year fixed rate decreased 6bps to 4.89%. 

BNZ chopped 20bps off its six-month fixed lending rate, taking it to 5.09%. 

Its three-year fixed home loan rate moved from 5.09% to 4.99%. 

On Monday, the country’s largest bank, ANZ, cut its six-month special to 5.14% and its two-year rate to 4.89%.