First-home buyers with less savings are increasingly securing home loans and getting a foot on the property ladder - but they are also taking on larger debts.
New Reserve Bank figures showed first-home buyers with deposits less than 20 per cent last month took out $325 million worth of home loans across the country, up 46 per cent on February last year.
It made them the country's fastest-growing home loan customers.
Yet, it also meant their average home loan size had jumped to $441,576 - about $100,000 higher than the same time last year, and $83,000 higher than that paid by first-home buyers with deposits of at least 20 per cent.
The growth in first-home buyers came at a time when new customers were thin on the ground because of dwindling house sales, CoreLogic senior property economist Kelvin Davidson said.
According to the Real Estate Institute of NZ, national house sales fell 9.5 per cent last month compared to a year earlier, while Auckland sales fell 17.9 per cent.
"Banks are clearly targeting first-home buyers with lower deposits because that is one area where they can grow market share in a tight market," Davidson said.
Yet the focus on those with less savings in the bank has led some pundits to raise concerns buyers may be getting in over their heads.
KPMG's quarterly Financial Institutions Performance Survey cited the Reserve Bank's January data to calculate first-home buyers were on average borrowing $395,257 to buy their properties.
"For first home buyers, borrowing $400,000 is quite a large amount, assuming a 20 per cent deposit ($100,000), when the average annual household income before tax was $105,719 for the year ended June 2018," the report said.
"Combined with the considerable cost of living, especially in Auckland where the average house price is $800,000 and would require a $160k deposit, more and more New Zealanders are using their KiwiSaver funds to finance their first home."
The report said conservative estimates suggested around one-third of first home buyer deposits were coming from people's KiwiSaver accounts.
"This trend is possibly due to New Zealanders feeling as if digging into their retirement funds is the only way to get onto the property ladder," it said.
Property website OneRoof also published research this month showing the owners of only one-third of all Kiwi properties had managed to completely pay off their mortgages.
"It would be worrying if the next generation of first home buyers were mortgage prisoners," OneRoof editor Owen Vaughan said.
However, CoreLogic's Davidson said the trend of lending to low-deposit, first-home buyers was unlikely to set off alarm bells just yet among Reserve Bank regulators.
This type of lending made up only 12 per cent of the total number of home loans given out to owner occupiers last month.
This was "comfortably" below the Reserve Bank's regulation that borrowers with small deposits make up no more than 20 per cent of each bank's total number of owner occupier home loans, he said.
Banks also had strict lending criteria, meaning each home loan customer would have to prove they had sufficient income to cover rises in home loan interest rate repayments of up to 7 per cent, he said.
Loan Market mortgage adviser Bruce Patten said the Government and Reserve Bank would likely be pleased rather than concerned because they had been trying to open up home ownership to more first-home buyers.
CoreLogic data showed first-home buyers had this year become the most active buyer group in Auckland, snapping up 28 per cent of all sales.
Investors and owner occupiers moving to new homes had by comparison each accounted for 27 per cent of total purchases.
Elsewhere, first home buyers were also "enjoying strong market shares in Hamilton, Wellington, Christchurch, and Dunedin", CoreLogic said.
Hutt City in Lower Hutt, meanwhile, had become the country's number one hotspot for first-home buyers where they snapped up 41.5 per cent of all homes sold this year.
Auckland's Papakura was next on the list with 40.6 per cent of homes going to first-home buyers.
"It's good to see those numbers, particularly in Papakura, which has traditionally been an investors market," Patten said.
New Zealand top 10 first home buyer hotspots
1. Hutt City, Lower Hutt, where first-home buyers snapped up 41.5 of all homes sold this year
2. Papakura, Auckland, with 40.6 per cent of homes going to first-home buyers
3. Upper Hutt City with 36 per cent of homes going to first-home buyers
4. Porirua City with 34.8 per cent of homes going to first-home buyers
5. Waitakere, Auckland, with 34.2 per cent of homes going to first-home buyers
6. Manukau,Auckland, with 30.6 per cent of homes going to first-home buyers
7. South Waikato District with 29.9 per cent of homes going to first-home buyers
8. Ashburton District with 29.8 per cent of homes going to first-home buyers