The Reserve Bank of New Zealand's controversial speed limit on low deposit mortgage growth appears to be working to slow riskier lending and cool the overheated housing market.The RBNZ limited the growth of mortgages with loan-to-valuation ratios of over 80 per cent to 10 per cent of new mortgage flows from October 1. It said when introducing the policy that it needed to see three to six months of data to assess whether the policy was working to reduce the risks to the banking system's stability from overvalued real estate.Data released in the first four weeks of January show a sharp slowdown in high LVR lending, a drop in overall mortgage approvals, and a fall in both house sales and median prices in the hottest market of Auckland through late 2013.The high LVR share of new mortgage flows dropped from 25.1 per cent in September to 5.6 per cent in December. The share was 12.7 per cent in the first month of the limit but dropped to seven per cent in November.After exemptions for government-guaranteed loans and construction loans, the high LVR share of new mortgage flows had fallen to 4.7 per cent in December, from 5.8 per cent in November and from 11.7 per cent in October.Elsewhere, Reserve Bank figures show mortgage approvals fell 10.4 per cent in the 13 weeks to January 17 compared with the same 13 weeks a year ago. Before the October 1 start of the lending restrictions, new mortgage approvals were growing at over six per cent per annum.Real Estate Institute of New Zealand figures for December showed nationwide sales volumes fell 18.3 per cent from November. Volumes fell 11 per cent in the three months to December. They had been rising at an annualised rate of 15 to 20 per cent before the restrictions. The REINZ's stratified median house price for Auckland fell 3.4 per cent in December from November, having risen 14.4 per cent in the year to December. The nationwide stratified mean house price fell one per cent in December, having risen 9.2 per cent in the year to December."The latest REINZ house sales figures show that the housing market is clearly cooling, [with]… the 'soft landing' that the RBNZ was hoping for… [because of]… its high LVR home loan restrictions," Westpac chief economist Dominick Stephens said.