The bigger issue now is ensuring borrowers can withstand higher interest rates over the next couple of years.
But those higher rates - and tough new government regulations - have prompted banks to reassess mortgage lending risk.
And that's a good thing.
As well as lower prices offering young people a half chance at a home, it means we may start to see the financial risk housing debt poses to the economy easing in an orderly fashion.
This trend follows the successful rebalancing of agricultural debt through the past five years.
As recently as 2018, the Reserve Bank was highlighting the build-up of dairy debt as a significant risk to the financial stability of the economy.
But since then, dairy sector debt has declined by around 12 per cent ($5 billion), reducing debt-servicing costs, and meaning farmers will be better positioned to deal with any potential future downturn in dairy prices.
Personal consumer debt has also fallen sharply amid the Covid-19 pandemic and as household savings rates have improved.
Reserve Bank figures show consumer debt fell from $15.14 billion in June 2020 to $13.3b in May this year.
The one area of private debt that has grown rapidly in the past year is business debt - up nearly 9 per cent.
But economists tell us that is a good thing. When business borrowing slumps, it suggests a serious lack of confidence in the outlook.
Business borrowing fell off a cliff when the first lockdown hit.
Although supply chain and inventory woes will be causing some firms to rely more heavily
on debt, the resurgence in borrowing across the past year reflects something of a return to normal for the economy.
In fact, with banks now seeing more risk in the housing market, there is some hope they'll be more willing to lend to business. That could help drive investment in new capital and ultimately improve productivity levels in the economy.
Of course, Crown debt has blown out enormously to cover the cost of the Covid response.
Instead of a trim and slim core Crown to GDP ratio of 20 per cent, New Zealand is now on track to see it peak at around 37 per cent in the next year.
Though that's still relatively low by international standards, many would argue it is too high given our vulnerability to international shocks.
Still, it would be even more of a concern if private debt was continuing to soar at a record pace.
So while debate rages about the Crown accounts, we can be thankful for the positive trend buried in our private debt mountain.
NATION OF DEBT:
• Monday: How much do we owe?
• Tuesday: Can we afford the rising cost of housing debt?
• Wednesday: High dairy price drives sharp fall in farm debt
• Thursday: Banks need to do better on business lending - economist
• Thursday: Consumer debt falling by billions but missed payments on the rise
