ANZ slashed it's mortgage rates after a move by Kiwibank and now Westpac could join the mortgage-rate battle.

This is good news for borrowers and rates may go lower according to a banking expert.

A spokeswoman for Westpac said: "We're considering our options."

Favourable wholesale interest rates - what banks pay to access funding - are helping keep mortgage rates at some of the lowest levels New Zealand has seen.  The flip-side is that savers are facing falling returns on bank deposits.

Massey University's David Tripe said there was scope for mortgage rates to continue to fall. "Lending rates haven't gone down far enough yet to reflect the reduction in bank funding costs," Mr Tripe said.

Meanwhile, speculation is growing that the Reserve Bank may cut the official cash rate, which has a big influence on mortgage rates, next month.

Craigs Investment Partners analyst Mark Lister said the Government's newly announced tax crackdown on property speculators - combined with the Reserve Bank's moves to combat house price inflation through lending restrictions on property investors - had increased the chances of the official cash rate moving lower.

Source: NZ Herald