Macquarie Group has passed a milestone in the rejuvenation of its mortgage business, with the group reporting growth in its portfolio for the first time since it re-entered the market in 2010.Australian Prudential Regulation Authority banking statistics published last week show that Macquarie Bank Mortgage Solutions increased its portfolio by A$83 million in March. Macquarie Group's executive director, banking and financial services, Frank Ganis, said he was always confident the business would turn around, but he conceded that it took longer than he expected.Now that the business is back on a growth path, Ganis is keen to see it develop. He has expanded distribution this year and introduced new products.Macquarie's Australian mortgage business reached a peak of $23.9 billion in early 2008. The global financial crisis meant that Macquarie could not continue to fund the business through mortgage securitisation and it stopped lending that year. It relaunched the business in July 2010, but the book continued to run off until the first net growth figures showed up last week. Macquarie now manages $11.1 billion of mortgages.Ganis said: "The turnaround took a little longer than we thought it would for a couple of reasons. The market has been slow. And we took a cautious approach. We wanted to get the product right, get the distribution right and get the funding right."Ganis describes the distribution strategy as "narrow and deep". Macquarie mortgages are sold by AFG, Mortgage Choice, Aussie and Advantedge brokers. In January, the bank added Mortgage House to the network."We wanted to work with distributors that had a strong national presence," Ganis said.Macquarie underwrites all its loans rather than using an automated credit scoring system. Ganis said this allowed Macquarie to tailor its loans."Our typical borrower is medium to high net worth and borrows more than the average loan size. The average loan-to-valuation ratio is 75 per cent."There is a lot of demand for tailoring. People like to have a blend of fixed and floating rates. They might want sub-accounts, with a line of credit for investment.Macquarie's loans are not cheap but it has been an aggressive discounter. It is currently offering a discount of 91 basis points off the standard variable rate.Ganis is rolling out some new products. Macquarie has added an income-verified loan to its range, which is aimed at self-employed borrowers.And it has been testing a loan for self-managed superannuation fund trustees. Ganis sees a slow development in this market. "Trustees are looking at how they can leverage their superannuation assets but there are a lot of rules and restrictions."Ganis said he was confident Macquarie had a sustainable funding model for the business. It has moved away from reliance on securitisation alone to a mix of warehouse funding, securitisation and the use of Macquarie Group's balance sheet.