Competition is continuing to heat up in the mortgage market, with a new rate dipping below 5 per cent.
SBS Bank today launches a special five-year rate of 4.99 per cent, understood to be the lowest on offer in the market.
The Invercargill-based lender said the rate was available for a limited time to existing customers - and their friends and family - for new lending over $100,000.
Customers who introduce family and friends will be eligible for the special rate without having to take out new lending of more than $100,000, the bank said.
SBS Bank, formerly known as Southland Building Society, has a mutual structure in which it is owned by its customers.
It has 17 branches in the North and South islands.
SBS Bank is yet to establish a branch in Auckland, but has mobile mortgage managers based in the city.
Chief executive Wayne Evans said SBS Bank was focused on growing its lending to the residential market.
"We're in a very competitive landscape," he said. "For a small bank we have consistently provided some of the best residential mortgage offers in the market."
Falling wholesale interest rates - what banks pay to secure funding - are allowing lenders to offer increasingly competitive home loan rates.
Last month HSBC New Zealand slashed its special fixed home loan rates to a flat rate of 5.29 per cent, while TSB unveiled New Zealand's first 10-year fixed rate, at 5.89 per cent.
ASB and ANZ have special five-year rates of 5.75 per cent and 5.89 per cent, respectively.
BNZ has a 5.79 per cent five-year rate on offer.
Westpac chief economist Dominick Stephens said last month that a combination of low interest rates and population growth would drive the housing market on to new heights. "Low inflation will prompt financial markets to push fixed mortgage rates even lower early this year," he said.
Data released by Quotable Value last week showed all Auckland house values rose 13 per cent in the last year, and 43.8 per cent since 2007, to an average of $786,106.