Homeowners are flocking to their banks to demand better interest rates on mortgages.

It comes after Bernard Hickey's column last week, which pointed out that a drop in wholesale rates had given banks more leeway to drop interest rates. Slower growth in the property market made them keen to compete for each other's business. His advice that borrowers ask their banks for a better deal has been followed.

BNZ had seen a 20 per cent increase in inquiries. ASB also reported a lift.

Hickey said traffic surged to record levels on Interest.co.nz, where people looked at mortgage rate comparisons, calculators and articles about rates. "Over 50,000 readers came to our site this week, almost double a regular week."

On Twitter, readers said they had negotiated loans to as low as 4.9 per cent. Others had their rates reduced by half a percentage point or more to rates such as 5.15 per cent, fixed for two years.

A typical advertised rate is 5.79 per cent, although Westpac, Kiwibank and ASB this week cut their two-year rates to 5.55 per cent. On Friday that was the cheapest two-year rate offered, although BNZ had a 5.1 per cent 18-month rate and KiwiBank was advertising a 4.99 per cent one-year rate for people with 30per cent equity.

Colin Jackson said Hickey's column prompted him to ask for a discount. "I just emailed the person I usually deal with, referred to Hickey's article and said I'd like a 0.5 per cent reduction. I still can't believe I did this."

Jackson had two loans, one floating at 5.75 per cent and the other fixed at 5.8. "They offered to cut my floating to 5.25 per cent, and to break my fixed and put that on floating at 5.25 per cent as well. They actually gave me more than I asked for."

Jackson will save thousands of dollars a year. "It was just a matter of asking nicely."

But Marie Patel found it harder to get a deal from TSB. "When I first asked I was turned down."

One of her friends contacted his bank and had half a percentage point knocked off his mortgage. Patel went back to her bank and asked again, and was offered a 0.25 discount. Threatening to change banks, she was offered a 0.5 per cent drop. She estimated it would save her $1000 a year.

Broker John Bolton, of Squirrel, said most banks would discount about half a percentage point off their advertised rates. "The best four-year rate I've got for a client is 5.7 per cent." He had negotiated two-year rates of 5.29 per cent and three-year rates of 5.55 per cent, compared with advertised rates of 5.55 per cent and 5.75 per cent.

The bigger the loan the more clout a borrower had, he said. An investor with several loans would be able to get help with costs such as break fees and legal fees. "Banks are prepared to stump up as much as $4500 to cover refinancing costs."

ASB spokesman Shaun Drylie said the bank had always been willing to help customers find the best banking package.

Realestate.co.nz chief executive Alistair Helm said the low interest rates would likely create a shortage of property listings this winter because they were keeping sales figures high.

During colder months the number of listings tended to drop off more than sales. House sales exceeded listings between June and August last year. "With banks becoming even more competitive, that's only going to exacerbate the difference between listings and sales."

By Susan Edmunds | Email Susan