Banking minnow SBS Bank has launched a home loan rate which undercuts the major Australian-owned banks.

Formerly Southland Building Society, SBS still has a mutual structure where it is owned by its customers, but also has a banking license.

From today it is offering 3.39 per cent fixed for two years as well as a cash back offer. The rate is under the 3.45 per cent being offered by the ANZ, ASB, BNZ and Westpac.

But is still higher than Chinese-owned banks which have undercut the whole market and HSBC.

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According to interest.co.nz Bank of China has the lowest two-year fixed rate on the market at 3.15 per cent followed by ICBC at 3.18 per cent and China Construction Bank on 3.19 per cent, while HSBC is offering 3.35 per cent.

Shaun Drylie, chief executive of SBS Bank, said the move showed the bank was serious in its aspirations to "shake up New Zealand banking".

"Now we're a fully-fledged national bank with a full suite of banking services, and a branch network across the country. We've also invested in digital technology that enables anyone to bank with us from anywhere in the country at any time of day or night," Drylie said.

"But we're done being New Zealand's best-kept banking secret – it's time to let more people know about the great things we do for our members and the communities we operate in."

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SBS was established in 1869 and has 15 branches across New Zealand. It has total assets of $4.8 billion. That compares to ANZ - New Zealand's largest bank which has $165 billion in total assets.

SBS is not the only New Zealand bank to try and take on the Australian banks this year as they seek to capitalise on the negativity towards the Australian-owned banks in the wake of Australia's Royal Commission into the finance sector.

Earlier this year offered to rate match any Australian-owned bank. That deal is no longer running.

Kiwibank has also run a number of specials undercutting the majors although it is currently higher on the two year fixed term.

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Drylie said there had been dramatic changes in society in recent years and it had become clear that customers no longer wanted shareholders and profits favoured ahead of the wellbeing of customers and communities

Drylie said its profits did not go offshore and were reinvested back into the business.

SBS has also launched a new logo.