The Reserve Bank of New Zealand has advised banks informally that it will soon set a "speed limit" of 12 per cent for new mortgages with high loan-to-valuation ratios, banking sources have told Banking Day.This would mean a maximum of 12 per cent of total new mortgages would be allowed to have LVRs above 80 per cent. This is significantly below the 30 per cent share of growth seen over the last year for such low deposit mortgages.Bankers expect the announcement within the next week or two. The Finance Minister's office said it did not expect any move to be announced "within the next few days."Mortgage lending grew by a total of NZ$9.2 billion or 5.3 per cent in the year to May, RBNZ figures show. The bank has estimated that about 30 per cent or $2.76 billion of that growth in the last year was in the high LVR category. It previously signalled, in a June 4 consultation paper, that it could impose a speed limit of 10 per cent on the proportion of growth coming from the high LVR category. Consultations ended last Wednesday.The Reserve Bank has ramped up its warnings about the housing market overheating in recent months, foreshadowing the use of 'macro-prudential' tools such as a high LVR speed limit. The bank is reluctant to use its 'blunt tool' of an Official Cash Rate hike to cool the housing market, given consumer price inflation remains below its one to three per cent target, and it does not want to further inflate an already over-valued New Zealand dollar.If the speed limit is imposed at 12 per cent, lending growth would slow sharply. If it had been imposed a year ago and banks went right up to the edge of the limit and still lent a total extra $9.2 billion, then the high LVR lending would have been $1.66 billion lower, at $1.1 billion. Bankers say that in reality the banks will be reluctant to go too hard up against the 12 per cent limit given this would be a condition of their banking licence, suggesting the banks would instead opt for a lower number of around 10 per cent in practice.The sources said the Reserve Bank appeared not to be making any exemptions for first-home buyers, as had been suggested by Prime Minister John Key. The bank has previously signalled that it could impose the speed limit with as little as two weeks' notice, and that it was opposed to exemptions for particular classes of buyers.The banking sources said banks would struggle to deal with such a short time-frame, given there were large backlogs of pre-approved high LVR mortgages.Reserve Bank spokesman Angus Barclay declined to comment on whether the Reserve Bank had made a decision, or, if it had, when it might make an announcement.The spokesman for Finance Minister Bill English, Craig Howie, said nothing had changed since English told reporters last week that the Government was still consulting with the Reserve Bank over the implementation of