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Consumer credit demand has returned to pre-pandemic levels driven by a rise in personal loans.
Data from credit bureau Centrix shows new consumer loans granted in September were 18 percent higher compared to a year ago, with credit card applications up three percent year-on-year.
Centrix managing director Keith McLaughlin, said consumer credit demand has fluctuated in recent months as households battled rising living costs.
Home lending has fallen with the cooling housing market, but the rise in personal loans could be a sign of households facing the squeeze, he said.
"I think that's more a reflection of people borrowing to maintain their lifestyle.
"Every household needs a certain amount of cashflow to survive and when you have things like increasing cost of living ... then that does put a squeeze on household budgets," McLaughlin said.
Households were closing gaps in their finances with personal loans, he said.
Consumer arrears were stable during September, with 10.6 percent of people behind on repayments, up two percent year-on-year, but unchanged month-on-month.
"I think generally New Zealanders have been very responsible as far as borrowing and managing their loans. If you look back over the last three to five years, you'll find that arrears and defaults have been dropping over that period of time."
Despite the increase in credit card applications the number of New Zealanders with active credit card accounts has fallen by a third since 2019, Centrix said.
This was driven by younger New Zealanders using buy-now pay-later schemes, McLaughlin said.
The average credit limit on active cards was $7600.
