Kiwibank has become the second bank to reduce its fixed home loan rate, following the Official Cash Rate cut on Monday.

The Reserve Bank cut the OCR to a record low 0.25 percent from 1 percent.

Governor Adrian Orr said the cut was necessary to support businesses and employment.

The last time the RBNZ made such a big cut was in March 2011 after the Canterbury earthquake.

Kiwibank has dropped its one-year fixed rate to 3.09 percent, its lowest ever.

Yesterday ANZ announced cuts to its one and two-year fixed rates.

All the major banks have dropped variable rates by the full OCR cut amount.

ANZ has also announced it will temporarily waive the fee on contactless debit card payments for its small business customers.

This article was originally published on RNZ and re-published with permission.

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