Competition to attract offshore funding has forced banks to lift the rates they offer for term deposits, putting upwards pressure on long-term mortgage rates and stoking appetite for savings as the nation's economy goes through a rebalancing stage, the bank said in its latest Property Focus.

"The historical experience when it comes to housing is four to five years of boom followed by four years of weakness or consolidation," the bank said in its report. "The major change investors need to accept" is that gains in house prices won't double that of income growth, it said.

Reserve Bank Governor Alan Bollard reiterated his concern the banks weren't passing on cuts to the official cash rate in their short-term lending rates today, and said they risked undermining monetary and fiscal policy. Parliament's Finance and Expenditure Committee urged banks to further reduce short-term lending rates and accused them of profiteering while they received taxpayer subsidies through the government's deposit guarantee scheme.

ANZ National said the banks' ability to cut borrowing rates was complicated by persistently high swap rates, the country's reliance on offshore capital, the intense competition for cash domestically, retail investors' target nominal return as opposed to real returns, and investors' expected returns.

"Given this combination, there is still continued pressure to secure deposits (from a limited national savings pool) and hence continued pressure on deposit rates to move up. This then has flow-on pressure to borrowing rates," the bank said.

The more pressure witnessed in competition for deposits, the more the bank is convinced deleveraging is taking hold, it said.