Earlier a police spokesperson said several other vessels had gone to help the boat and confirmed all on board were safe and well.
Brittany Rose was enjoying a day with family in Kinloch at Lake Taupo when they heard a big bang as the boat went up in flames.
Rose said she screamed for people to go help and said a man ran to his jet ski and “blasted” out to the boat.
Rose believed no one was hurt in the incident.
After the bang, Rose said the boat started to smoke before going up in flames.
She said people were able to get out to the boat to help before it went up in flames.
Since the fire, police have issued a warning to boaties using the water in the area because the boat has sunk.
In a statement, police said the boat had sunk in about 4 metres of water about 300m from shore and may pose a hazard to other water users.
“Boaties in the area should watch for debris and follow instructions of the Harbormaster,” police said.
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