SBS: low mortgage rate no stunt

SBS BANK’S boss says a rock bottom 3.99 per cent mortgage rate will be profitable and is not just a marketing stunt.

The minnow launched the special one-year fixed rate yesterday, saying it would run for a limited time.

The sub-4 per cent home loan rate is the lowest New Zealand has seen in several decades and could stir larger rivals into cutting their own prices.

The Southland-based lender timed the promotion to coincide with a ‘‘refresh’’ of its branding and services, as it aims to strengthen its presence in

Wayne Evans Auckland and nationwide.

Chief executive Wayne Evans said it would make money on the deal, but its ownership structure meant shortterm profitability was not as pressing. ‘‘Because our members are our shareholders . . . we don’t have to make a lot of profit out of them.

‘‘We can actually leave the money in their pockets if they’re borrowers, or put more money there if they’re investors.’’

Evans expected the offer to bring strong growth to the bank’s balance sheet, and did not believe larger rivals would match it.

With a mobile banking app coming soon and other products in development, he said the small bank was able to hold its own.

‘‘This is not the end of it. The competition probably won’t like hearing that.’’

Like most bank ‘‘specials’’, the offer has several strings attached.

It only applies to residential owner-occupied properties, requires new lending of at least $100,000, 20 per cent equity, and signing up for one other SBS product.

Smaller locally-owned banks such as SBS frequently lead the mortgage rate market, despite a small market share.

SBS has 16 branches and 490 staff nationwide, with a credit rating of BBB from ratings agency Fitch.