ANZ has become the first bank to cut its fixed home loan rates after the Reserve Bank's emergency official cash rate cut this week.

The official cash rate was slashed from 1 per cent to 0.25 per cent on Monday.

Banks applied the reduction to floating rates immediately, but did not move on fixed rates.

ANZ said on Wednesday it would cut its one-year fixed rate special by 40 basis points to 3.05 per cent.

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Its two-year fixed rate special would cut by 30 basis points to 3.35 per cent.

The rates take effect from March 19.

Term deposit rates have been cut by 0.25 per cent.

"These new rates will provide some relief and support for customers during a difficult and uncertain time," said Ben Kelleher, managing director retail and business banking for ANZ in New Zealand.

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The new fixed home loan rates are believed to be the lowest ever offered by a major bank in New Zealand.

"While there are a range of factors in setting these rates, including the Reserve Bank of New Zealand's emergency official cash ratedrop of 0.75 per cent this week, we've been mindful to balance the needs of borrowers and savers," Kelleher said.

"For borrowers, every dollar counts, and lower interest rates will leave more in their pockets to help them through the disruption caused by Covid-19.

"At the same time, it's important that bank deposits remain a viable option for savers who are looking for a low-risk investment with a reasonable rate of return."

Kelleher said domestic deposits were also vital to ensure banks had enough funding to support lending.

The drop in rates has prompted some borrowers to question whether they should break their existing rates to claim a new, better deal.

Most banks will let you break a fixed term to move to a cheaper offer, but in almost all cases you'll be charged a break fee.

How much that costs depends on how long you have left of the fixed term and what the bank could lend the money to a new borrower for. Generally, you end up paying roughly what you save by switching in a break fee. But sometimes it can pay off, particularly when banks are competing hard for business and offer to pay a break fee to tempt you over.