The value of new mortgage approvals reached a record high in the past month.
Weekly loan amounts passed $1.5b the biggest weekly figures since the Reserve Bank started recording them in 2003.
But the number of approvals stood at 7,777 far lower than the high of 11,193 in December 2006.
Economist Shamubeel Eaqub said the total value of new home loans may be at a record high, but new lending criteria was working as it should. The latest figure was for fewer than 8000 new loans or re-mortgaging.
Mr Eaqub said seasonally adjusted, the pace of growth was slowing in November and December.
"It doesn't look like the mortgages that are being lent are irresponsible relative to where the market is at.
"The banks are lending within reason and the rate of growth is coming off, this is exactly what the Reserve Bank would want to see, not a sudden stop in the housing market but a gradual moderation."
Real estate chief executive and former mortgage broker Mike Pero said lower interest rates were giving people the confidence to borrow.
"I don't know where it's going to end, we keep thinking this is going to peak sooner or later, but December was probably the best month in New Zealand history for lending."
He said home loans were larger because more people were having to borrow the full amount as prices rose.