Lenders have slashed variable mortgage rates to attract new customers in the booming pandemic property market, even as the Reserve Bank keeps official interest rates firmly on hold.

At its meeting today, the Reserve Bank left its official cash rate target on hold at the record low level of 0.1 per cent, which is where it has been since November last year.

However, while official interest rates have remained on hold, lenders have been busy slashing their variable mortgage rates.

RateCity reports that the number of variable rates on its database under 2 per cent has jumped from 28 to 46 in just two months. This is also more than three times the number of sub-2 per cent variable rates at the start of the year.

The cheapest of them sits at just 1.77 per cent, although the average variable rate for new customers is 2.72 per cent.

However, there is a trade off. While variable interest rates are continuing to fall, along with short-term one and two-year fixed mortgages, longer term fixed rates are generally rising.

There were 32 four-year fixed loans with an interest rate below 2 per cent at the start of the year, as well as three five-year fixed loans below this benchmark. Now there are none.

"Since COVID, the battleground for the banks has been fixed rates. However, with record numbers of customers now locked in, some lenders are shifting their sights to variable rates," said RateCity's research director Sally Tindall.

"Banks need to be winning new business, not losing it, if they want their loan books to keep moving in the right direction.

"Well over half of all mortgage holders are still on a variable rate. That's a huge market of potential refinancers for the banks to target."

More to come.