Westpac Bank and ANZ National Bank today joined other main banks in cutting their key two-year lending rates.
Rates were led down late last month by state-owned Kiwibank which cut its two-year lending rate to 9.29% from 9.60 for borrowers with at least 20 percent equity in their purchase.
Today's move is an about-face for ANZ National after it hiked its variable lending rate earlier this month.
On Friday, ASB and BNZ cut their two year rates to 9.4 percent from 9.7 percent and today the other main banks played catch-up.
Wholesale rates fell dramatically last Thursday when a jobs report showed 29,000 jobs were lost in the March quarter. Money markets rallied 22 basis points as they pre-empted an official interest rate cut by the Reserve Bank.
The two-year swaps market staged the biggest rally in two years with rates dropping as low as 7.73% from 7.97%.
Economists said last week's jobs data dramatically pulled forward the prospects of the Reserve Bank moving into an easing cycle. They now expect a rate cut in July, rather than late this year, or early next year.
ANZ and National Bank announced on May 2 an increase in the variable home lending rate by 25 basis points to 10.95%.
Mortgage lending rates had been rising as banks faced higher borrowing rates offshore, as markets adjust to the sub-prime credit problems.
Banks have also been lifting deposit rates to attract cheaper domestic funding, with rates of 8% and 9% on offer.
