The Reserve Bank of New Zealand said new low-deposit lending fell by more than it originally expected in the first few months of its 'speed limit', but it expects such lending to rebound slightly in coming months as banks adjust to the new macro-prudential tool.RBNZ macro-prudential policy adviser Lamorna Rogers wrote in a bulletin paper called "An A to Z of loan-to-valuation restrictions" that, since the October 1 implementation of the tool, the bank's focus had shifted to monitoring bank compliance and the tool's effectiveness.Rogers said banks were complying with the rules and in the four months since its implementation high LVR lending had fallen on average to 6.7 per cent of total new mortgage lending after exemptions, which was well below the 10 per cent maximum set by the speed limit.The share of high LVR lending before exemptions was running at around 7.8 per cent, which was below the bank's initial expectation of around 15 per cent."This partly reflects lower than projected use of exemptions, which are averaging around 1 per cent of total lending, compared to projections of five per cent," Rogers said.Exemptions include "Welcome Home" loans (aimed at New Zealanders returning from working overseas) and bridging loans."It is possible that the share of high-LVR lending could modestly increase in coming months as banks adjust to the new framework," Rogers said.The bank had found early evidence the tool was working to cool house price inflation and lending growth, she said. The comments in the 14 page paper confirm brief comments by the bank in its March 13 Monetary Policy Statement.Seasonally adjusted house sales volumes fell 13 per cent in the five months to February and new home loan approvals fell a seasonally adjusted seven per cent over the three months to February. Total housing credit growth slowed from a peak of 6.4 per cent growth annually in October to 6 per cent by January.Rogers said banks had also increased their mortgage rates for high LVR loans by around 100 basis points relative to low LVR loans to adjust for the higher capital requirements of the high LVR loans.The bank's counter-factual modelling of what would have happened to house prices in the absence of the speed limit found that house price inflation would have been around 2.5 per cent higher without the limit. The Reserve Bank was also monitoring whether there had been "leakage" into risky lending by non-banks or other institutions it did not regulate."To date, banks appear to be complying with the spirit of the LVR restrictions, and the data do not show any material increases in unsecured lending, or lending by non-regulated entities. "