SBS Bank, including its HBS Bank unit, has become the second bank to advertise a 4.99% mortgage interest rate, offering this as a six-month, fixed-term "special."
The offer is available to residential borrowers only who have their full banking with SBS and a maximum debt servicing ratio of 35%.
SBS has also cut its two-year mortgage rate by 24 basis points to 5.55%. The new two-year rate brings SBS in line with the rate offered by ASB, Kiwibank and Westpac, but trails the 5.49% offered by ANZ and the National Bank, and the 5.50% advertised by TSB Bank.
The 4.99% six-month special is the lowest six month rate advertised by a bank, and is 66 basis points below SBS and HBS's floating rate. Kiwibank currently has a 4.99% one-year "special" rate.
SBS says the maximum debt servicing ratio is a formula it uses to calculate where a customer can met a financiers lending criteria in terms of percentage of repayments against income.
"The exact calculation takes into account the debt repayment obligations of the customer (eg principal and interest on mortgage, credit card repayments, personal loans repayments etc) and divides this by income (salary/wages/WINZ, percentage of overtime/bonuses, percentage of rental income, adjustment for student loan)," SBS says.
Separately, SBS has also cut its 18 month term deposit rates, both for those receiving quarterly interest payments and those receiving interest at maturity. The former has been cut 25 basis points to 4.25%, and the latter 25 basis points to 4.35%.
The SBS mortgage and term deposit rate cuts are the latest in a series of cuts to both by banks. They come with wholesale, or swap, interest rates the banks themselves borrow at falling in recent weeks on worries about global and local economic growth prospects. Speculation has also been mounting that the next move in the Official Cash Rate - currently at a record low of 2.5% - may be down, highlighting a lower for longer interest rate environment. Banks have been cutting both fixed-term mortgage rates - but not floating rates - and term deposit rates on the back of these wholesale rate falls.
See all bank advertised mortgage rates here. And see all advertised term deposit rates for one to five years here.
(Update adds detail on debt serving ratio added on SBS's website).
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