SBS Bank trims 6 month and 1-year fixed-term home loan rates

SBS Bank has become the second bank to cut some of its fixed-term home loan mortgage rates in the last few days after surprisingly weak inflation data for the December quarter led to a fall in wholesale interest rates and saw some economists push out their expectations of a Reserve Bank rate hike until late this year.

SBS and HBS Bank, with the latter formerly known as the Hastings Building Society now an operating division of SBS after being acquired in 2010, have cut their six month fixed-term rates by 10 basis points to 5.65% and one-year fixed-term rate by 5 basis points to 5.70%.

Last week sister banks ANZ and National cut their six month, one-year, 18 month and two-year fixed-term rates by up to 30 basis points. The SBS and HBS moves bring their six month rate in line with those advertised by ANZ, the National Bank and Kiwibank, although it's higher than Westpac's 5.59% and HSBC's 5.49% which is offered to that bank's premier customers.

At 5.70%, the SBS and HBS one-year rate also matches the ANZ, National Bank and Co-operative Bank, but trails Westpac's 5.59% and the 5.65% on offer at Kiwibank and to HSBC's premier customers. See all advertised bank mortgage rates here.

SBS and HBS both offer floating - or variable - home loan rates of 5.65%.

Wholesale 'swap' interest rates, which are often the basis for fixed mortgage rates, fell as much as 10 basis points after data was released last week showing the Consumer Price Index fell 0.3% in the December quarter from the September quarter. The fall meant annual CPI inflation fell to 1.8%, the lowest level since the September 2010 quarter, and down from 4.6% annual inflation in the September 2011 quarter.

This was against expectations for a rise, with the median expectation of economists surveyed by Reuters for 0.4% quarterly inflation in the December quarter, giving 2.6% annual inflation. The Reserve Bank of New Zealand was also expecting 0.4% and 2.6% for the quarter and year, respectively.