The big question is whether the banks will come under pressure to cut their floating rates too – although brokers report it's possible to get significant discounts on published floating rates.

The market is now pricing in a 2.05% official cash rate (OCR) by October compared with 2.5% now and one to five-year swap rates fell a further 19 to 21 points on Friday.

“From the point of view of the average household, it probably looks pretty good at the moment,” says Darren Gibbs, an economist at Deutsche Bank.

“But you've got to ask why are rates falling – investors are worried about the world they see,” Gibbs says. “It's a pretty dangerous place out there.”

Whether rates go lower still will depend on the outcome of the Greek election on June 17 and whether or not Greece remains in the euro zone.

In his weekly commentary, Tony Alexander at Bank of New Zealand summed the situation up in one word: “Bad.”

Not only is Greece likely to leave the euro, but China's economy isn't growing as fast as expected and dairy prices are plummeting. “It's just not possible to paint a bright, rosy picture for our economy with so many bad things happening offshore,” Alexander says.

As for those mortgage rate cuts, Kiwibank kicked off them off by lauching a one-year fixed “special” at 4.99% on April 26, the same day the Reserve Bank opened the door to a cut in the OCR.
Nothing happened for nearly two weeks and then, on May 8, SBS Bank cut its three-year and five-year rates, the latter by 70 basis points to 6.2%, as well as offering a “special” five-year fixed rate at 5.99%, still the lowest five-year rate in the market.

ANZ National Bank followed the next day with a 40 basis point cut to its one-year rate to 5.25% and that seemed to open the floodgates.

Westpac, ASB Bank, and a number of other lenders also cut a range of fixed rates.

By the end of last week, TSB Bank had the lowest standard one-year rate of 5.2%, BNZ the lowest standard 18-month rate of 5.1%, TSB again had the lowest standard two-year rate at 5.5% and AMP Homeloans had the lowest standard three-year rate of 5.75%.