By Amy Williams, of RNZ
Despite thousands of home owners needing mortgage holidays and warnings that the housing market is overcooked, people are still rushing to borrow huge sums.
The Reserve Bank of New Zealand's latest figures show more than 87,000 distressed homeowners needed a mortgage holiday this year - these are homeowners who in normal times would have defaulted on their mortgage.
That follows the highest month of mortgage lending on record in September, of $7.3 billion.
Mortgage broker Bruce Patten said it was an investors' market, with investors going interest-only with an existing property to leverage a new loan off, therefore having a substantial deposit for a new property.
"You can spend a million dollars, buy a house for a million dollars, at 2.5 per cent and it will cost you $500 a week. Most houses that cost a million dollars are going to rent for more than $500 a week."
It costs other home buyers with a healthy deposit paying low interest almost double that.
Patten is a director of Loanmarket, the country's largest mortgage broker.
He said when mortgage lending hit an all-time record high in September, $2bn went through his business's wider group.
"It's by far the biggest month that we've ever seen and I think part of that is that the banks are under pressure, there's lots more people seeking advice. It's huge numbers, unprecedented numbers nobody's seen before around everything to do with housing."
Housing fever is nationwide.
The latest figures from Realestate.co.nz show the average national asking price topped $772,000 in October compared with the same month last year - an increase of 12.4 per cent.
Auckland topped the list with an average house asking price over $1 million.
Real estate agent Leila MacDonald has sold houses in Auckland's central suburbs for over 30 years.
She said investors were snapping up homes, sending first home buyers back to the drawing board.
"It's crazy just now. First home owners in the lower bracket are finding it really hard to buy a property because there's so much competition."
MacDonald said most homes were selling at auction, where bidding was competitive.
"Some have been looking for two years and it's not getting better for them because the market is so hyped up just now it's not helping them at all."
When RNZ reported Property Investors Federation's executive officer Sharon Cullwick arguing that first home buyers are hindering the market by purchasing rentals, the feedback ran hot.
Infometrics senior economist Brad Olsen said it was not accurate.
"It's the most patently ridiculous statement I've ever heard," he said.
"It's quite clear that if a first home buyer is buying a property and moving into it, there's no reduction in supply they had to move out of a rental. Whereas you've got investors who are taking up additional homes and eventually trying to rent it out to the market."
Sense Partners economist Shamubeel Eaqub agreed.
"It's quite tone deaf really, we know that first home buyers don't have the clout in terms of affordability and capital to be able to compete with investors. To blame them is quite ridiculous."
He said regardless of the cause, the housing market needed fixing.
"The housing market has been broken for many decades but the massive increase in house prices in the middle of a pandemic shows just how utterly broken it is. The cost is predominantly on young people and future generations. It is not good enough," Eaqub said.
"If we want to avoid a revolution in the future we need to start looking after young folk and part of that includes giving them access to secure, warm, affordable housing."
The Reserve Bank of New Zealand's figures show the number of mortgage deferrals and those moving to interest only increased each week in October - but were still lower than their peak in April.
It's not yet known how many of the 87,000 homeowners are still on a mortgage holiday.
The Reserve Bank of New Zealand said it will have more information in coming weeks about homeowners in hardship.
Its monetary policy update next week will include comments on the housing market. Until then, it will not comment.
Patten said when the mortgage deferral scheme ends, homeowner hardship will be obvious.
"Until we get to that point we really won't know. I don't think it will be too bad but the reality is there will be some people who will need to sell their property at that point."
Olsen said there could be tough times ahead.
"The mortgage deferral shame is providing a bit of a concrete foundation under the housing market stopping anything going softer," he said.
"Once those mortgages do come off there is the increased risk that you start to see additional pressure in the housing market with some people not able to make their payments."