BNZ says it will drop its one-year fixed home loan rate to 4.49 percent.

Karna Luke, the bank's executive for customer products and services, said it was competing hard for new home loan customers by offering attractive rates.

"We're seeing strong customer demand for our 1-year fixed term as borrowers look for the right balance between securing a competitive rate and maintaining flexibility in an evolving rate environment," he said.

Luke said for someone moving 5.19 percent with a $500,000 mortgage over a 25-year term, this new rate could save over $2400 across the 12-month fixed period.

"At 4.49 percent, this is a nearly 40 percent drop from the February 2024 peak of 7.35 percent for the one-year fixed term - providing real relief for households.

"New customers can access the rate immediately, as can existing customers who are about to refix or are on variable rates."

Commentators have suggested that interest rates could have a little further to fall given the weakness in recent GDP data.

Mortgage adviser Jeremy Andrews, from Key Mortgages, said he thought there was still room for further falls.

"Repayments at peak market rates over a 30-year loan term are now similar to what you'd pay over 20 years at today's special one- and two-year rates.

"We're encouraging most mortgage holders to take advantage of this and accelerate their repayment terms. Most homeowners choose to keep their repayments at similar levels when rates drop."