House-hunters with small deposits have roughly five times less chance of getting a mortgage after new lending rules came into force in October.
The latest Reserve Bank figures show banks wrote a total of $4.5 billion of new home loans in December, of which $252 million, or 5.6 per cent, was in the high loan-to-value-ratio (LVR) - small deposit - category.
That was a huge reduction from September, when banks wrote almost $1.2b worth of high-LVR loans, or 25.1 per cent of the total.
The Reserve Bank's "speed limits" prohibit banks from allocating more than 10 per cent of their new lending to borrowers with less than 20 per cent equity.
The only exemptions are for Housing New Zealand's Welcome Home Loans, the refinancing of existing loans, bridging finance, and loans for new builds.
In December, those exemptions added up to $42m worth of loans, or 0.9 per cent of total mortgage lending.
But the statistics do not yet include the effect of the new construction exemption - the result of a surprise backdown by the central bank.
Once the details are finalised, the banking sector's lending will fall even further under the new limits.
The Reserve Bank only started tracking banks' aggregate LVR lending in August last year, after becoming concerned about the possibility of a systemic risk in the financial sector.
The restrictions were designed to help take some steam out of the property market and reduce the risk of a major fall in values.
The central bank's usual tool for slowing credit growth is the Official Cash Rate, which will be reviewed tomorrow after sitting at its historic low of 2.5 per cent for almost three years. Economists broadly expect that bank governor Graeme Wheeler will leave the cash rate unchanged this week, but prepare the market for the first of a series of hikes in March.