Macquarie Group's banking business is likely to take a much more cautious approach to term lending in the near future, the firm's chief financial officer, Greg Ward, told an investor briefing on the annual profit yesterday.Ward said the decision to curtail residential lending, taken in February, was the most prominent example of this policy.Macquarie's residential lending book increased seven per cent to $23.7 billion for the year to March 2008.The mortgage book increased $1.5 billion in the September 2007 half year and increased by just $100 million in the March 2008 half. The bank said it expects the mortgage book to reduce given it is now undertaking little new lending.Macquarie may soon cease mortgage funding altogether. Of the few favoured clients supported over recent weeks Virgin Money has decided to drop out of the market while Aussie Home Loans is looking for an alternative funder.Macquarie has also cut back the funding provided to a range of lenders through warehouse facilities. The bank said that as at March 2008 it cut warehouse lines to less than half the $2.7 billion level disclosed late last year.Nicholas Moore, managing director of Macquarie Capital and chief executive officer designate, said he was not convinced that Macquarie will begin offering mortgages any time soon."It's possible. At the moment it's hard to be optimistic about the mortgage securitisation market given where we've been over the last few months."We had a very active global securitisation market in mortgages as we know, in the United States and Australia and in Europe, and that largely - not completely, but largely - has come to an end."Everybody expects a lot has to change for that market to get back to where it was previously."