Some banks are increasing staff to cope with demand post-interest rate hikes but mortgage brokers say "ridiculous" house prices have some first home buyers "freaking out".
Competition in parts of the Bay of Plenty meant pre-approvals were also being extended as four or five people were "fighting" for the same home.
Meanwhile, one financial research analyst said when it came to low-interest rates and a strong economy "you can't have your cake and eat it too".
Rapson Loans and Finance owner Chris Rapson said, in his view, banks had cut their resources to the bone so it was still difficult dealing with them at the moment.
Rising values in the property market had also impacted some people's ability to own a home.
"The property market was red hot for a long time and values just kept going up and up. It was ridiculous."
Incomes had not kept up and could no longer support the level of borrowing needed to service buying what were, in his opinion, "pretty sh****, average houses".
Three years ago in Tauranga, $800,000 would buy a quality home, but now Rapson believed "you are basically buying something that is cheaply constructed".
Ownit Rotorua manager and registered financial adviser Hayley Hubbard said the company had been dealing with constant inquiries in Rotorua.
She said the lack of rentals in the city meant more people were looking at home ownership but that was fraught due to the strong property market.
"There are still affordable areas in Rotorua but you can have four or five people going after the same house. That can be disheartening and some first home buyers are fighting with cashed-up buyers and freaking out.
"So whether we go through to a settlement is another story and we are having to extend approvals."
Homeowners were also looking at breaking loans, to lock in a rate.
"Some have loans coming off this year or mid-next year so they are keen to look at break costs to see if it is worthwhile."
Craigs Investment Partners head of private wealth research Mark Lister said you could not have "your cake and eat it too" when the economy was in good shape.
"We've avoided all those worse case scenarios and things have not turned out as badly as some people predicted. So we can't lose sight of the fact this is not a bad news story this is a good news story."
He said if rising interest rates were going to cause someone problems then they had probably bitten off more than they could chew.
Economics commentator Tony Alexander said in a OneRoof column the Reserve Bank had produced a massive shift in relative wealth positions across New Zealand society by causing a 30 per cent surge in average house prices.
"In that regard, they have succeeded in boosting wealth and increasing the willingness of people to spend on things like cars, couches, and domestic travel. The economy has surged, and as they planned, inflation is now coming back."
What they did not plan on, however, is inflation in the June quarter would hit 3.3 per cent rather than the 2.6 per cent they predicted two months ago, he said.
"This high inflation rate has led to forecasts of inflation hitting 4 per cent later this year and the Reserve Bank needing to quickly take away the record low level of interest rates which they introduced last year."
A Westpac NZ spokesman said it had helped first home buyers buy 3512 homes during the six months to the end of March – a 35 per cent increase on the same time last year.
"In recent months we've increased the size and capability of our in-branch, contact centre, and mobile mortgage manager lending teams to meet increased customer demand.
"We have seen a higher than usual volume of mortgage inquiries over the past few days, but we are meeting our targets of processing applications within a few days."
Westpac's special rates were one year 2.55 per cent, two years 2.89 per cent and 3.29 per cent for three years.
An ANZ spokeswoman said staff allocation on its home loan functions were commercially sensitive but numbers had increased.
"On average it takes two-to-three days to process a home loan application."
ANZ had made changes to its home loan rates in response to a number of market factors including progressive increases in wholesale interest rates.
She said ANZ NZ had increased its one year rate from 2.79 per cent to 3.10 per cent, the two-year rate from 3.19 per cent to 3.50 per cent and the three-year rate from 3.59 per cent to 3.84 per cent.
Kiwibank borrowing and savings senior manager Richard McLay said on Monday it decreased its two-year rate from 2.55 per cent to 2.49 per cent.
The one-year rate has moved from 2.19 per cent to 2.49 per cent and the three-year rate has increased from 2.99 per cent to 3.29 per cent.
Although it was a bit early to quantify the amount, Kiwibank had received an increase in inquiries from customers looking to break their existing fixed terms.
"So have made some changes to help streamline our process. We are encouraging customers wanting to break fixed loans to send us a secure message through internet or mobile banking, which we'll endeavour to respond to within 48 hours."
Kiwibank considered numerous factors when it raised rates, including current economic conditions, forecast cost of funds and market pricing.
McLay said it also needed to balance its deposit and lending rates "so all our customers are getting a fair deal".
A Bank of New Zealand spokesman said the New Zealand economy had continued to strengthen and "we've seen an increase in the costs of funding, which impact interest rates".
But home loan rates were still at historically low levels.
BNZ rates were 2.55 per cent for one year, 2.95 per cent for two years and 3.25 per cent for three years.
Interest rates had also increased for many term deposits that would be "welcomed by savers", he said.
- Rates are subject to conditions and changeable.