Kiwibank's mortgage book grew by well over $1.26 billion in the year ended June but growth tapered off through the year, the government-owned bank says.
The government-owned bank's mortgage book reached $13.7 billion by the end of June, but growth in the June quarter this year of $223 million was nearly half the $413 million in the December quarter.
Chief executive Paul Brock insisted the growth had been strong.
"The key issue that we've been seeing is a big flight to fixed rate lending over the year - a lot more customers, as rates have gone up, moving to fixed rates and that has a direct bearing on your interest margin."
Mr Brock did not agree its growth rate was slowing. He said at 10 percent, the rate on loans over the year was a stronger rate of asset growth than the previous year.
Mr Brock said the bank had been planning to manage how much it was doing in the high (Loan to Value Ratio (LVR) area even before the Government's changes came in.
Like the four biggest banks, Kiwibank's lending to people with less than a 20 percent deposit has been shrinking. It lent $106 million less to those people in the June quarter, while lending to people with bigger deposits rose by $329 million.