ANZ chief executive Shayne Elliott acknowledged that the bank was guilty of some poor execution as it made changes to its Australian home loan processes, which played a part in the fall in mortgage balances the bank suffered in the March half.He also acknowledged that the problems with the bank's home loan system are not fixed.Responding to changing market dynamics and pressure from regulators, ANZ has shifted its housing finance marketing focus to owner-occupiers and principal and interest loans. It has also tightened its standards in line with calls for lenders to have better insight into the income and expenses of borrowers.Elliott said that in doing this "we put some stress on systems, staff and customers. Our process failed some people badly."He said the bank's mortgage processing system was struggling and "in some cases no longer appropriate". The system needs "material re-engineering for the long term".One consequence is that it is harder to get a loan from ANZ and it takes longer. Its "proposition is a little bit less attractive".At the end of the March half, ANZ had one million Australian home loan accounts - down by about 18,000 from the previous half. The value of its Australian home loans fell by A$2 billion to $269 billion.This fall contributed to the poor performance of ANZ's Australia division, whose operating income fell 7 per cent from $5.1 billion in the March half last year to $4.7 billion in the latest half.Investors loans accounted for 31 per cent of the loan portfolio in the March half - down from 34 per cent a year earlier. Only 26 per cent of new loans written during the half were for investors.Interest-only loans make up 18 per cent of the book - down from 36 per cent a year earlier. Only 12 per cent of new loans written during the latest half were interest only.As well as acknowledging that its systems needed a big fix, Elliott conceded that the bank "overshot" as it re-focused its home loan strategy."We overdid the investor market. We overdid the correction," he said.The bank is aiming for "prudent, targeted growth" in home lending and will not chase volume for the sake of it.ANZ chief financial officer Michelle Jablko said there were some warnings signs in the home loan market, with more customers going into hardship and slower to come out of delinquency. Five per cent of its home loan customers are in negative equity.The economic backdrop is roughening up asset quality."When customers do get into difficulty it's taking them longer to get out," she said.Jablko said the home loan balance sheet would continue to decline in the September half and would take some time to stabilise.