Reserve Bank of New Zealand statistics released on Wednesday show there were NZ$896 million worth of mortgage approvals by banks in the week to April 1.
This was highest level of approvals by value since the week to November 20, 2009.
Approvals were up from NZ$824.4 million the previous week and approvals in the last 13 weeks are up 1.4% on the same period a year ago.
This is the first rise from a year ago since January 2010.
Mortgage approvals picked up substantially in the wake of the Reserve Bank's decision to cut the Official Cash Rate by 50 basis points to 2.5% on March 10.
Banks cut their floating rates for new borrowers to around 5.75% later on March 10.
The central bank has vowed to reverse the monetary policy loosening once the rebuilding efforts in Christchurch after the February 22 earthquake have begun in earnest.
Most economists don't expect the Reserve Bank to begin tightening again until early 2012.
Meanwhile, mortgage brokers report banks have significantly loosened their lending criteria in recent months, increasing maximum loan to value ratios to 95% or higher and allowing larger multiples of lending to income.
Legal fees and other fees are also being dropped as banks strive to revive their lending growth in the wake of a long period of flat to no growth.
Average loan sizes are also larger.
Figures from Barfoot and Thompson for sales in the Auckland region released earlier on Wednesday showed sales volumes increasing sharply in March, with most of the increased activity happening at the upper end of the market as higher salary earners used increased disposable income after income tax cuts to leverage up and buy more expensive houses in the central and North Shore suburbs.