Vernon says he has been surprised a how little advertising there has been.

But below the surface it has been very competitive, Vernon says.

He says there has been competition and banks have written business on margins which are unprofitable. Besides that the banks have also found themselves in a squeeze with funding costs.

A trend to re-emerge is far greater volatility in the wholesale markets, where banks source their money to lend.

Wholesale markets have shown some quite big shifts and when the price of money has risen quickly banks have been taking a hit on margins.

Vernon says the higher interest rates maybe "masking" any rate war.

"When you have rates in the late 8 and 9% mark people think there's no rate war."

"Really it's been just as competitive as ever."

He says BNZ has written loans on 30 basis point margins and lost business to other banks that will write the loan on a 20-point margin.

BNZ, which through previous campaigns, encouraged the market to move to two year fixed rates is now pushing its Total Money variable option.

Vernon says this, as a sub 10% rate, starts to look attractive against fixed rates.

However, he warns people not use variable "in anticipation that fixed rates will start coming down by Christmas."

The reality is fixed rates, aren't likely to start falling until Christmas next year.