The state-owned bank yesterday reduced most of its fixed rates, with all those from two to five years now below 9%.
For homeowners with at least 20% equity in their property the three-year rate dropped 0.26% to 8.79%, although the two-year rate remained unchanged on 8.99%.
Kiwibank said the three-year rate was "significantly" below that offered by its competitors, while chief executive Sam Knowles said he expected the new rates to be keenly sought after by homeowners seeking to refix loans coming due for renewal.
Spokesman Bruce Thompson said Kiwibank was largely self-funded and doing particularly well in attracting deposits.
So the funding was available, at the same time as some perception was being built into the market that official interest rates would come down, he said.
"So the wholesale markets also, we believe, are giving us an indication that there's room to move."
A survey of economists published by Reuters on Wednesday showed a majority expected the Reserve Bank to cut its interest rate to 7.5% by the end of the year, from 8.25% now.
Mr Thompson also said the three-year fixed rate seemed to be the time period where other banks were aggressively competing and Kiwibank believed it could beat them.
Kiwibank wanted to be on the shopping list of people who would be looking soon to refix mortgages they now had with the major banks, he said.
While Kiwibank's new rates would also be attractive to home loan new entrants, that market had slowed.
For loans that do not meet the 20% equity criteria, Kiwibank's two-year rate is 9.19% and the three-year rate 8.99%.
The bank also dropped its one-year rate, which does not have the 20% equity requirement, by 0.11% to 9.29%, while its four and five-year rates are both down 0.06% to 8.99%. - NZPA
