Short term rates continue to drop

Kiwibank and Westpac are the latest large lenders to cut short term fixed rates and hike longer-term home loans, as the divergence between short and long term markets continues. 

Effective this morning, Kiwibank has slashed its one year special rate by 16 basis points to 2.19%, the state-backed bank's sharpest ever mortgage. 

Kiwibank's one year offering becomes one of the cheapest in the market, level with SBS. Heartland Bank's online one year loan at 1.85% remains the cheapest by some distance.

The lender's one year standard rate falls to 3.04%, a drop of 16 basis points.

However, longer-term rates will go up. Kiwibank's three year special is up 20 basis points to 2.99%, four year fixed is up 30 basis points to 3.39%, while five year fixed terms go up to 3.69%.

The same trend can be seen at Westpac. 

The big four bank has introduced a new 6 month special at 2.99%, and an 18 month at 2.45%, towards the cheaper end of the market.

Yet longer-term special rates rise from 10 to 30 basis points. 

Westpac's three year to five year specials go level with Kiwibank at 2.99%, 3.39%, and 3.69% respectively.