Household lending activity is starting to rise again, but new borrowers are likely to continue to face higher mortgage rates for longer.
Reserve Bank data shows gross new lending flows between August and October were 4 percent higher than a year ago, after a subdued 12 to 18 months.
Property research firm CoreLogic, which analysed the data, said the total value of lending ($16.8 billion) was still well below levels seen in 2020 and 2021.
Chief property economist Kelvin Davidson said new borrowers would need to be prepared for high interest rates.
"It's probably fair to assume mortgage rates might not go up very much further, but also, we are in a higher for longer environment. Even if we see wholesale rates come down a bit, it might not necessarily be very big," he said.
Davidson said with the Reserve Bank talking tough on inflation, he expected mortgage rates next year to be similar to current levels.
But he said the lack of low-deposit home loans ensured borrowers had not fallen behind as they faced higher interest rates.
Recent data from Centrix showed mortgage arrears remained low in October, despite arrears climbing from 1.25 percent of mortgage holders to nearly 1.3 percent.
Loan-to-value ratio rules continued to bite hard, with just 0.3 percent of investors receiving a loan in October with less than a 35 percent deposit, CoreLogic said.
When it came to owner-occupiers, only about 7 percent borrowed with less than 20 percent deposit.
CoreLogic said mortgagee sales remained low as borrowers continued to meet higher financing costs, despite interest rates climbing.
Davidson said the loan-to-value ratio rules were helping.
"It's 10 years now in New Zealand that we've had loan-to-value ratio rules in some shape or form. So I think the macroprudential rules, as they call them, have given the housing market a degree of insulation."
The most recent CoreLogic data showed there were 41 mortgagee sales in the third quarter.
During the global financial crisis, mortgagee sales peaked at about 700 to 800 in a quarter.