Recent rounds of term deposit and mortgage rate cuts see SBS Bank scrub up well

By Gareth Vaughan

The recent rounds of banks giving to borrowers through mortgage interest rate cuts and taking from savers through term deposit interest rate cuts have left one of the smaller, locally owned banks looking more generous than most.

Whilst most banks cut the bulk of their advertised term deposit rates, SBS Bank, and HBS Bank, the former Hastings Building Society which is now an operating division of SBS, cut only a solitary one, being their 18 month rate.

Cut 25 basis points to 4.25% for savers with NZ$5,000 deposits getting interest payments quarterly, and 25 basis points to 4.35% for those getting interest upon maturity, these certainly aren't the best advertised rates in the market. At 4.60%, that honour over 18 months belongs to Bank of Baroda and Bank of India for minimum NZ$5,000 deposits and TSB Bank, also at 4.60%, for minimum deposits of NZ$10,000.

However, over both two and three-year periods SBS, named Financial Institution of the Year at Roy Morgan Research's inaugural annual New Zealand customer satisfaction awards in April, has the best advertised term deposit rates on offer from a bank for minimum deposits of NZ$5,000 at 4.95% and 5.20%, respectively. Both are with interest paid at maturity.

Both Bank of India and Bank of Baroda offer 5% for two-years and 5.25% for three years for minimum deposits of NZ$10,000 with interest paid quarterly.  Both Indian banks have BBB- credit ratings, which is the lowest investment grade rating and a notch below SBS Bank's BBB. The SBS and Bank of Baroda ratings are from Fitch with Bank of India's from Standard & Poor's.

See all advertised bank term deposit rates here. And make sense of the rates with our term deposit rate calculator here.

The wash up, after the mortgage rate cuts, also leaves SBS with some of the better advertised rates going. The bank's offering a 4.99% six month "special", which is available to residential borrowers with their full banking with SBS and a maximum debt servicing ratio of 35%. See more here on how SBS calculates the debt servicing ratio. The SBS "special" is the lowest six-month mortgage rate advertised by a bank.

SBS, which is a building society as well as being a registered bank, also has the lowest advertised three and five year mortgage rates, through "special" offers of 5.65% and 5.99%, respectively. These two offers are conditional on customers having all their banking with either SBS or HBS and loan-to-valuation ratios within 80%.

Despite the wave of fixed-term mortgage rate cuts in recent weeks, no bank has yet cut its floating, or variable, rate with these having been more popular among borrowers over the past couple of years. Advertised floating rates range from 5.50% to 5.79%. See all advertised bank mortgage rates here.

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