This year in October, The Reserve Bank introduced new rules to control riskier loans to just 10% of new lending to protect the financial system in case of a blow to the economy.

The central bank said there has been considerable fall in mortgage lending to those with small deposits, but it is still too early to know whether it has deliberated an overvalued housing market.

Prime Minister John Key says the most recent information on new home loan lending rules shows that banks are abiding by the new rules.

New mortgage limitations have seen a big fall in lending to those with deposits of less than 20 percent.

The Loan to Value Ratio restrictions brought in last month signify that banks can only lend more than 80 percent of a home's value on 10 percent of new mortgages.

That's seen high LVR lending drop from about 25.5 percent in September to just 11.7 percent.

Grant Spencer, the deputy governor of Reserve Bank mentioned that retail banks are well-placed to meet the new target, which will help diminish the risk of a sharp fall in house prices, which could damage banks' financial position and the economy.