New Zealand's major lenders have converged on almost identical fixed mortgage rates, with little incentive to undercut each other while the housing market sits in its winter quiet period.
New Zealand's major banks have effectively stopped competing on price for fixed mortgage rates. The last round of adjustments — by ASB and its main rivals — has brought all four of the biggest lenders to nearly identical rate offerings, with the traditional differences between one-year, two-year, and five-year terms now barely distinguishable in advertised terms.
The pattern was noted by interest.co.nz analyst David Chaston, who described the current environment as banks going into "defensive mode" on home loan rate offers. The convergence follows a period in which wholesale swap rates fell around 15 basis points from their May-June plateau.
What happened
ASB's most recent adjustment brought its rates into line with the other major banks — ANZ, BNZ, and Westpac. The six-month rate premium that ASB previously held has gone. Its 18-month rate now matches two of its main competitors exactly. The three-year and five-year fixed rates have settled at levels consistent with what the other major lenders are advertising.
The convergence means that for the first time in some months, none of the big four are meaningfully undercutting each other on price. Chaston noted that this contrasted with periods of active competition, when lenders would offer差异化 rates to attract borrowers who were refinancing or buying property.
Term deposit rates moved too
Alongside the mortgage rate adjustments, ASB cut its two-, three-, four-, and five-year term deposit rates by between 10 and 25 basis points. The five-year term deposit rate no longer offers the 5 percent that was available previously. The broader term deposit market has also compressed, with Westpac's two-year rate at 4.30 percent sitting only marginally above what the other major banks are offering.
The term deposit cuts reflect the same underlying shift in wholesale funding costs that has influenced mortgage rates. Wholesale swap rates have fallen by about 15 basis points from the relatively stable levels seen between May and mid-June, moving to lower rates by late June.
Why now — and what it means for borrowers
The timing is not accidental. Winter is traditionally the quietest period in the New Zealand housing market, with fewer properties listed and fewer sales completing. In that environment, the incentive for banks to offer aggressive mortgage rates to attract new borrowers diminishes. There is less refinancing activity, fewer first-home buyers active, and fewer investors making decisions.
The interest.co.nz analysis suggests the competitive dynamic is unlikely to re-emerge until the spring selling season gets underway — roughly two months away. Borrowers who are refixing now are essentially in a period where they have to take the rates as they are, rather than find meaningful differences between lenders.
For borrowers who can wait, the hope is that more competitive offers will emerge when the housing market picks up. Whether that actually happens will depend on where wholesale funding costs are at the time, and whether the RBNZ's next moves on the OCR create a different rate environment.
Reading the current rate table
As of July 1, 2026, the major banks' lowest advertised fixed mortgage rates for borrowers with less than 80 percent equity were broadly similar across terms. The one-year rate at the main banks was sitting around 4.65 percent, while five-year rates remained higher — reflecting the expectation that the OCR would need to rise further before any cuts become possible. The spread between one-year and five-year rates, while narrowed from its recent peak, still showed the characteristic upward slope that comes from markets pricing in future OCR increases.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.