Wellington, Feb 8 NZPA - State-owned Kiwibank is cutting its variable mortgage rate by 14 basis points to 5.65 percent and hiking its 18 month fixed rate by 10 basis points to 6.49 percent.

A spokesman for the bank said about 30 percent to 40 percent of mortgage lending was on the variable rate so the bank wanted to ensure it had a competitive rate.

Market activity suggested there was room to bring the variable rate down a little.

The Reserve Bank of New Zealand's (RBNZ) official cash rate is at a record low of 2.5 percent.

When RBNZ governor Alan Bollard was asked about the timing of a rise in the rate on TV One's Q&A programme on Sunday he said "we've been boringly predictable right through this, we've said about a year ago that it was going to be some time the middle or the latter part of the year, and that's what we're still saying".