A small player in the home-lending business has launched a mortgage rate undercutting the major banks

From today, SBS, is offering 3.39 per cent fixed for two years as well as a cash back offer.

The four major Australian owned banks, ANZ, ASB, BNZ and Westpac, are offering 3.45 per cent.

Formerly Southland Building Society, SBS is owned by its customers - but also has a banking licence.

Chief Executive Shaun Drylie says the new, low rate shows it's serious in its aspirations to "shake up New Zealand banking".