An assembly for use in a system for heating water comprises a heat exchanger for heating cold water to produce overheated hot water and a blending chamber in which the overheated hot water is mixed with cold water to produce blended hot water. An inlet valve controls the flow of cold water to the heat exchanger. A bypass valve controls the flow of cold water into the blending chamber. A flow restrictor restricts the flow of cold water from the bypass valve into the blending chamber when the demand for blended hot water increases above a predetermined amount.