Wellington, July 1 NZPA - State-owned Kiwibank has triggered a new battle in the home loan market with ANZ National Bank moving quickly to cut fixed lending rates after Kiwibank cut its two-year fixed home loan rate.

Kiwibank cut its two-year rate to 6.99 percent per annum from 7.30 percent. Within hours ANZ announced it was cutting its rate to 7 percent from 7.3 percent and National Bank cut its rate to 6.99 percent.

The ANZ three-year rate fell to 7.3 percent from 7.75 percent, the four-year rate fell to 7.6 percent from 8.19 percent, and the five-year rate to 7.75 percent to 8.49 percent.

National Bank cut its three-year rate to 7.25 percent from 7.79 percent, its four-year rate to 7.55 percent from 8.2 percent and the five-year rate to 7.79 percent from 8.5 percent.

ANZ National, New Zealand's largest bank, did not comment on the rate cuts.

Kiwibank chief executive Sam Knowles said its rate cut was to give some certainty to customers concerned about interest rate volatility.

Kiwibank also introduced a 12-month cap option on its variable rate, which for a $250 fee ensures the rate does not increase above 6.50 percent per annum for 12 months. The current variable rate is 5.9 percent.

Economists are generally forecasting that interest rates will rise as the Reserve Bank of New Zealand shifts monetary policy to a more normal setting as the global economy recovers.