The one year special rate is the second cheapest in the market behind ANZ, which cut its one year special to 3.05% this morning.
ANZ's rate, effective this morning, is the cheapest ever major bank mortgage rate in New Zealand.
Unlike ANZ, Kiwibank has kept its two year rate on hold. Its two year special offering remains at 3.39%.
Kiwibank has stopped short of waging a price war against ANZ, but other big four banks are expected to follow the lender and slash fixed rates this week.
Kiwibank's new fixed card comes into effect on Monday March 23.
It follows the Reserve Bank's unprecedented official cash rate cut this week to 0.25%, the lowest in history. Banks will be under pressure to pass on rate cuts, will face pressure as term deposit rates fall.
Amid record low bank mortgage rates, non-banks boast the two cheapest rates in the market. Heartland's digital one year mortgage is just 2.89%, while KiwiSaver provider Simplicity's one year rate is available at 2.95% to existing customers.
The state-backed lender's chief executive Steve Jurkovich pledged this week to support Kiwi borrowers amid the financial turmoil caused by the Covid-19 outbreak.
"Our commitment is to support our customers and the wider New Zealand economy as the Covid-19 situation evolves," Jurkovich said, as the bank slashed floating rates on Monday.
Squirrel's John Bolton expects rates to continue to plummet following the OCR cut.
He told TMM Online: "I think we’ll have lenders below 3% in the next few weeks but only just below 3%, so like a 2.95% one year special. The attraction of getting a rate below 3% will be too great. Specials will disappear as credit risks increase, which they will so I’d expect to see lenders looking to try and take extra margin where they can. I definitely think locking in now is a smart decision."
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