It adds this will harm first home buyers the most.
The company's chief property economist Kelvin Davidson bases these comments on the most recent mortgage statistics released by the Reserve Bank just before Christmas.
They cover the month of November and show busy activity at that time, with lending at $9.1 billion, the fourth highest monthly total on record.
But looking forward, this intensity is unlikely to last.
Davidson warns that many New Zealanders will have to reach into their wallet quite soon to pay the higher interest rates that have already arrived, either in tandem or in anticipation of the Reserve Bank's inflation fighting practices.
He says about two thirds of borrowers will have to pay a higher interest bill in the next 12 months as their fixed-rate mortgages expire or their floating mortgages are adjusted – approximately in line with the Reserve Bank's figure of 70%.
“This will be a headwind for the housing market itself, as well as the wider economy, as households are forced to divert their spending towards mortgage debt repayments,” Davidson wrote.
Davidson adds the implementation of LVR rules has a historic precedent. In 2017, banks were told to restrict high LVRs to 10% of total lending, and they responded cautiously, cutting their actual figure to 5%.
“If history repeats this time around, there is still plenty of tightening yet to come for low deposit lending, which is likely to hamper first home buyers the most.
“A slowdown in lending flows remains firmly on the cards in 2022.”
In other analysis, Davidson says the November figures showed strong activity by owner-occupiers, with investors on a steady downwards trend.
He says they show it is almost impossible for an investor to get a low deposit loan, unless paying for a new-build.
He adds high LVR lending was still above the speed limit – at 10.5% of total loans. The new requirement of 10% kicked in at the start of the month, but Davidson says banks have a grace period to adjust to the new rules so that pre-approvals can work their way through the system.