ME Bank drops three year fixed rate below 4%

The low official cash rate and an increasingly competitive home loan market has prompted ME Bank to cut its three year fixed rate product by 29 basis points.

Its three year standard home loan is now offered with a 3.99% per annum interest rate. Its one year fixed loan rate was cut by 40 basis points to 4.29%, and its five year loan is now down 20 basis points to 4.39% per annum.

Although the Reserve Bank did not cut the official cash rate in April, ME Bank head of home loans Patrick Nolan says money markets have begun pricing in two more rate cuts.

He also attributes the bank's rate cut to increased competition in the market.

"With competition hotting up, many Banks will pass these fixed rate savings directly on to customers," says Nolan.

"Banks are fighting over a smaller slice of the lending pie which is helping to push fixed rates to never before seen lows."

The bank also now allows new borrowers to pay an extra $30,000 over the fixed term of their loan.