B737-800 First Officer reported a call from the aft flight attendants stating that smoke and fumes were present in the aft lavatory area with a lavatory smoke detector activated. The flight attendants isolated the lavatory water heater and removed power to it and the smoke and fumes dissipated. The flight crew continued to destination.

Narrative

On vectors to visual final Runway XXC at ZZZ; about to turn base; Flight Attendants (FAs) notified us that they smelled fumes in the aft cabin and that an aft lav smoke detector had been activated. I asked them if it was a cigarette smell. They said no; it smelled like burning plastic. They said no one was experiencing breathing issues and there was no visible smoke. I informed the Captain. We decided to [request priority handling]; in order to attain traffic priority and get on the ground ASAP; in case the situation deteriorated; ensure Airport Rescue and Firefighting (ARFF) vehicles could inspect the aircraft immediately upon landing; and to be present for an immediate response in case the situation did worsen. ATC gave us an immediate turn to a dog leg to final; cleared us for the visual approach to Runway XXC and told us speed was our discretion. While this was going on; the FA's were updating us on the situation in the aft cabin. They said the alarm had gone out. They also mentioned that they suspected that it was the hot water heater and that they had removed power from it. However; they were not sure what the source of the fumes was and that it was a heavy plastic/electric burning smell though no one was having difficulty breathing. The Captain and I quickly discussed donning oxygen masks and goggles. Neither one of us saw any smoke nor smelled any kind of burning. Given that we were less than five minutes from landing and needed to slow down; configure; and get stabilized for the approach and that we were trying to communicate with the FAs; ATC; and each other; we decided that the safer course of action was to not don oxygen masks or goggles as per the smoke; fire; or fumes checklist. We asked the FAs to update us immediately; if the situation worsened. We landed; cleared the runway; and had fire/rescue inspect the aircraft. They detected no heat signature. We then ran the below-the-line items for the checklist and requested crash/rescue escort us back to the gate in case whatever caused the fumes (we still weren't sure exactly what was going on) turned into a full-fledged fire. We got to the gate. Personnel from the fire department boarded the aircraft and inspected the aft portion of the cabin and could not detect the source of the fumes nor any heat signature but did smell the heavy plastic/electric burning smell. After they'd made their way to the back of the aircraft; we allowed the passengers to begin deplaning. Afterward; contract maintenance inspected the aft lav and told me the hot water heater was the source of the fumes. This wouldn't prevent it from happening again; but I think it would be helpful if the checklist contained a note directing us to the section in the case of a lavatory smoke detector activation; though I don't know that we would've done anything differently even if that were the case because we we weren't 100% sure this was a lavatory fire issue until after the Maintenance Tech told us that; after the fact.