Kiwibank has slashed its floating interest rate for construction loans in the wake of the Reserve Bank's decision to exclude construction lending from low deposit restrictions.

The state-owned bank this afternoon announced a rate of 4.99 per cent per annum for owner-occupied construction loans - a 0.66 percentage point discount on its normal variable rate.

Kiwibank chief executive Paul Brock said the Reserve Bank's decision to remove new construction lending from loan to value restrictions was great news.

"We are already able to provide Welcome Home Loans without restriction. This enables us to help more people get into their own homes."

Welcome Home Loans are already excluded from the restrictions. The loans require only a 10 per cent deposit but borrowers must meet house price and income criteria.

The Reserve Bank introduced new lending restrictions on October 1 which means the banks must cap new home lending to those with a deposit of less than 20 per cent to 10 per cent.

Those who do not meet the new rules face losing their license to operate.

Kiwibank said its construction loan offer would only be available for a limited time and normal lending terms and conditions applied.