Rate war takes a new tack

Kiwibank has slashed its five-year fixed rate to 6.99%, the lowest rate on offer last week from any lender over any time frame.

National Bank and ASB have cut their five-year rates as well, but to only 7.4%, says market-watcher Philip Macalister from www.goodreturns.co.nz.

He says the Kiwibank move is an attempt to regain market share lost when it did not join last year's two-year rate war sparked by the BNZ.

Kiwibank's Bruce Thompson says the move provides an alternative to chasing short-term rates.

He says Kiwibank can offer the low rates because money markets are forecasting long-term declines in interest rates.

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