State-owned Kiwibank is cutting the interest on one of its fixed-rate mortgages, possibly just for a fortnight, as a means of "testing the market".
However, market specialists say it is unlikely to spark a bidding war among mortgage lenders.
The bank said in a statement it was dropping its one-year home loan rate from 6.45% to 6.15%, matching the bank's floating rate.
"It has been some time since there have been any significant changes to interest rates, so Kiwibank is testing the market with a cut-rate one-year offer.
We anticipate holding the rate until the end of the month," Kiwibank communications manager Bruce Thompson said.
Craigs Investment Partners broker Chris Timms said Kiwibank was now about one-third of a percent below most other banks.
"It is competing for business, throwing out a line and seeing what comes in.
The rate cut will be at the expense of margin but Kiwibank is trying to attract customers from the big four banks."
With no increase in the Reserve Bank's official cash rate until September, or perhaps not at all this year, the banking business would remain competitive, he said.
