Credit reporting agency Veda says a bumper increase in business and home loan borrowing activity is a sign of renewed confidence in the economy.

Commercial loan enquiries have increased for the first time in five years, which Veda managing director John Roberts said was "enormously positive".

"Business has hung in through a slow economic recovery," he said. "An increase in enquiries is a welcome sign of emerging stimulation in the commercial sector."

Commercial credit enquiries rose by nearly 7 per cent in the May-July 2012 quarter compared with the same period last year.

At the same time, the number of commercial loans that were defaulted on fell significantly, showing the sector was picking itself up from the aftermath of the global financial crisis.

Veda also recorded a massive increase in home loan lending enquiries, up 44.4 per cent in July compared to the same period last year.

The flurry of interest was especially frenzied amongst the Generation X group aged 28-43 years old, who increased enquiries by almost 50 per cent.

However, Reserve Bank statistics for June show an annual increase in the number of residential home loans of just 1.5 per cent.

That modest figure is consistent with recent reports from the major banks, with ASB yesterday saying its mortgage books had remained flat in the year to June 30.

Last month, BusinessDay reported that a flood of home loan approvals peaking in June had failed to translate into any significant loan book growth.

Roberts said the increased activity had been driven by the highly competitive housing market, with access to stable interest rates and relatively low cost borrowing.

"With the Reserve Bank's Official Cash Rate remaining at 2.5 per cent since March 2011 the banking industry has fiercely competed to attract new customers with very competitive interest rates - this is causing consumers to shop around to get the best home loan deal they can."

Consumer demand for credit was also on the rise, with inquiries up by 8.8 per cent for the quarter May to July 2012 on the same period last year.

That was the second consecutive quarter showing an increase in enquiries, which Veda said indicated a slow return to growth in the consumer credit market.

- © Fairfax NZ News