More than 10,000 home loan borrowers have applied or enquired about mortgage relief from the banks in just a few days.
Finance minister Grant Robertson announced an in-principle agreement with the banks to offer up to six months deferral on home loans last Tuesday.
But it wasn't until Friday afternoon that the banks officially began taking applications for the financial packages which will allow people to temporarily stop principal payments while the interest is added onto their loan amount.
A spokeswoman for ANZ New Zealand, the country's largest bank, said as of lunchtime Monday it had received 2500 home-loan deferral applications since Friday afternoon.
"Because customers will pay more on their loan over the longer term, we recommend they carefully consider whether a home loan repayment deferral is right for them. We'll be discussing options with customers when we speak with them."
She said the bank could also suggest customers extend their loan term or switch to interest only payments to lower their repayment costs.
"If reducing a customer's repayment amount would provide enough relief, we may be able to suggest ways to restructure a customer's lending to reduce their repayment amount.
"These options may have less of an impact on a customer's loan over the longer term."
Tracey Berry, GM customer solutions and service at TSB Bank, said it had received about a thousand enquiries so far - about 2 per cent of its home loan book but said she wouldn't be surprised if that rose to 10 per cent given the widespread effects of Covid 19 and the lockdown.
"The longer the lockdown continues the more impact it will have."
While banks already offered home-loan holidays it was typically part of its hardship application process which required a lot of evidence and information from borrowers.
She said the banks had to develop a protocol and process that was streamlined for the six month loan deferral package as a drawn-out process requiring a lot of information would not have been appropriate and could have been difficult given people were having to stay at home.
"We have up to 1000 in the pipeline," she said. But not all of them would go to deferral as some might choose to go interest only instead.
"It is not a free lunch. The loan still has to be repaid."
Berry said so far it had largely been owner-occupiers applying for the loan holidays while commercial borrowers and investors were applying to go interest only but that could change if tenants stopped paying rent.
Those who had already defaulted on their loan before coronavirus emerged as an issue would need to go through a normal hardship application, she said.
A Westpac New Zealand spokesman said it had received "several thousand" applications but couldn't give any more details at this time.
While a spokesman for BNZ said it had more than 4,000 applications for the home loan payment deferment as at close of business Friday.
"Our team is currently working through those applications as fast as possible."
An ASB spokeswoman said it had received a number of applications already for a mortgage deferral, and it anticipated this would continue.
Most of the banks have an online application form which customers fill out and are then contacted by a bank staffer.
Roger Beaumont, New Zealand Bankers' Association chief executive, last week urged people to go online for information first after bank call centres were jammed with people calling through only to find long wait times.
A Kiwibank spokeswoman said last week enquiries from customers seeking support were in the thousands.
"Half of all website enquiries were customers wanting to discuss the home loan repayment deferral (mortgage holiday).
"Due to the sheer demand we are asking our customers to visit our website in the first instance and lodge their initial request via our online website form. We have a special team getting back in touch with customers, assessing and approving solutions depending on individual situations."
She said the bank expected enquiries to increase over the next few weeks and asked for patience as its team worked through the backlog.