Data from credit bureau Centrix shows consumer credit demand rose 3 percent in the year-ended February.
But many households were still struggling to meet repayments, as overall arrears increased 8 percent year-on-year, although fell slightly from January.
Centrix said 416,000 people were behind on their repayments in February.
Mortgage arrears increased for the seventh consecutive month, with just under 19,000 people in behind on repayments, which equated to 1.3 percent of mortgages.
Home loan arrears were up 23 percent from February last year.
Centrix managing director Keith McLaughlin said home lending arrears could be put down to people rolling off fixed home loans and being unable to service higher interest rates.
He said the rise in home loan arrears was against the trend of recent years.
"If you look back over the last three to five years, arrears on home lending had been continuing to fall quite steadily," McLaughlin said.
"What we're seeing now is a reverse of that trend as they [arrears] are now starting to lift."
Despite the stronger demand for credit cards, personal and vehicle loans, demand for home lending fell sharply, McLaughlin said.
New mortgage borrowing was down 42 percent year-on-year in February.
"The property market has slowed down and consequently home lending has fallen," he said.
Compared to the stronger consumer demand, business credit demand fell 6-percent year-on-year, but increased 12-percent from January 2023.
Centrix said hospitality and retail sectors saw improving credit defaults, but the construction sector recorded more defaults.
Defaults in the construction sector increased 8 percent from a year ago.