What's happening to home loan rates?

Major banks have announced home loan interest rate changes in recent days, as markets grapple with what lies ahead for inflation and the economy.

BNZ is the latest to move, increasing some rates and cutting others.

It lifted its six-month rate by 20 basis points, to 4.69 percent, its one-year rate by 14 basis points to 4.79 percent, and its two-year rate by 10 basis points to 5.29 percent.

But it is reducing its three-, four- and five-year rates by between 10 and 30 basis points.

It comes after ANZ cut some of its fixed rates, reducing its one-year rates by 14 basis points, to a special of 4.65 percent and a standard 5.25 percent.

Its two- and three-year rates dropped by 20 basis points, taking the two-year special to 5.29 percent.

Westpac earlier reduced the rate on its three- to five-year terms, by between 20 and 30 basis points. That cut the rates to 5.29 percent, 5.39 percent and 5.49 percent on three-, four- and five-year terms, respectively.

Kiwibank chief economist Jarrod Kerr said wholesale rates had fallen a bit. "We're still in this stage of fluctuation where good news sees rates go a bit higher, bad news sees rates go a bit lower.

"The wholesale market, for example, had a cash rate of 3.1 priced by December this year, and now it's got a cash rate of 2.9. There's a 20 basis point pullback."

He said he expected the Reserve Bank to say in its update next month that an official cash rate (OCR) of 3 percent by the end of the year was about right.

"We can argue over how they get there but they pretty much told us they're going to 3 percent and they think over the longer term they'll probably need to go to 3.25 percent, so that's factored into markets and factored into retail rates."

Infometrics chief forecaster Gareth Kiernan said the ANZ response seemed to be because the bank "got a bit overexcited" a few weeks ago when it increased rates, and had to reverse that decision.

"If the war hadn't ended and inflation concerns had remained more intense, other banks would probably have followed, but the pressure at the longer end of the curve is now in the other direction as markets reassess how high the OCR will need to go in 2027, and for how long.

"Last week, swap rates for three to five years eased to their lowest level since early March. There's been some downward pressure on one- and two-year swap rates as well, but not quite as marked, reflecting an expectation that the Reserve Bank will still need to get the OCR back towards neutral this year, one way or the other, although the pressure or need for a near-term move is now less intense than last month's Monetary Policy Statement and split vote would have implied.

"This sustained expectation of near-term rate rises is probably feeding through into BNZ's shorter-term rate increases - but there is still a bit of a split in the market at the short end, and I suspect some banks with lower six to 18 month rates will be waiting to see what the RB signal or does at the early-July review."

Sign up for Money with Susan Edmunds, a weekly newsletter covering all the things that affect how we make and spend money.