Figures released by property valuation website myvalocity for September show the number of new residential mortgage registrations declined by 21 per cent.
Auckland saw the largest reduction in the number of new mortgage registrations, down 26.2 per cent on the same time last year.
The North Island's metro centres were also down 15.6 per cent compared to September 2015.
Wellington and the South Island metro centres buck the downward trend with growth in the number of mortgages of 2.8 per cent on the same time last year.
Myvalocity chief executive Carmen Vicelich said the figures reinforced the view the property market was cooling.
"Mortgage registrations are a good indicator of the financial performance of the market as it tracks the behaviour of all active buyers rather than just what is actually selling at the time," Vicelich said in a statement.
"The sharp decline in mortgage registrations is one of the most interesting trends we have seen for a while as despite good migration, record low interest rates and the price pressure that still exists in the property market, the number of mortgage registrations has consistently declined in recent months.
"This is something we have not seen before. The property market is, to some extent, seasonal and traditionally we expect to see a rise in mortgage registrations in Spring, however this has not been the case so far this year."
Mortgage registrations peaked in October 2015 and then saw a dramatic decline between December 2015 and March 2016, according to myvalocity's figures.
Vicelich said the trend indicates the Reserve Bank's additional LVR restrictions coupled with an ongoing lack of supply are having an impact.
myvalocity data for September 2016 shows the current market forces at play are having the biggest impact in Auckland. Investors in Auckland were down 35.3 per cent on the same time last year.
Vicelich said Auckland's first home buyers were the only sector that saw growth in September - up 4 per cent on the previous month - indicating first home buyers may be finding it easier to buy lower priced homes in the region given there are now less buyers in the market.