Lower inflation is thought to be responsible for ASB reducing interest rates on its three, four, and five-year home loans. 

The Official Cash Rate's predicted to peak early this year before falling, and inflation is lower than previously predicted. 

Squirrel Mortgages Chief Executive David Cunningham told Tim Dower that he believes the Reserve Bank would like to see retail banks continue to lower rates. 

He thinks it would be pleased with how things are unfolding but would like to see one-year rates start to drop. 

LISTEN ABOVE 

• Interest rates may drop further this year