When the financial crisis hit in 2008, Citibank was one of the banks that pulled back from the retail lending market. Now, with funding costs emerging as an issue once again, the bank's management is confident it will not be forced on to the sidelines again.Citibank Australia's head of mortgages, Vibha Coburn, said business conditions today are very different from the situation in 2008. "We had grown very fast through 2007, and then the liquidity premium went up so fast in 2008. We wound our book back because of the sharp rise in funding costs."We have been back in the mortgage market over the past year, but the growth has not been as great as before. We have good funding sources in the bank and we can sustain our growth."According to Australian Prudential Regulation figures, Citibank has a A$7.4 billion mortgage book and $6.2 billion in household deposits. In April, it issued $760 million in mortgage-backed securities.The deposit book has grown by 32 per cent over the past two years, although there has been a net outflow over the past six months.The mortgage book is down 17 per cent over the past two years and has remained in net outflow this year.Coburn said: "We came back into the market this year, but everyone else came back at the same time. It's hard to get the volumes up."We are on the right path. Our applications in October were four times higher than our volumes in January."The bank is starting to get a bit more aggressive with its offerings. Yesterday it cut its three-year rate to 5.99 per cent, which is the second lowest three-year rate on the Infochoice website. It has cut its two-year rate to 6.09 per cent.Coburn said: "The movement in the yield curve has been very steep and our fixed-rate pricing reflects that. These are exceptional market conditions and borrowers looking for certainty can lock in a good fixed rate."Forty per cent of the bank's recent applications have been for fixed rates - up from around three per cent at the start of the year.In June, Citibank introduced risk-rated pricing for its flagship Mortgage Plus variable-rate loan. Borrowers with a loan-to-valuation ratio below 70 per cent pay 6.7 per cent, borrowers with LVRs of  between 70 and 80 per cent pay 6.74 per cent and borrowers with LVRs of between 80 and 85 per cent pay 6.8 per cent (these rates will apply from November 18)."The trend is for people to borrow on lower LVRs. With pricing for risk they feel they are getting value for money," Coburn said.Citibank also offers borrowers on fixed rates the option of making extra payments of $1000 a month. Eighty per cent of Citibank's mortgage sales come through brokers. Coburn is aiming to build broker distribution and has hired Bankwest's head of broker sales, Aaron Milburn, to be head of broker distribution at Citibank. Milburn takes up his new role at the end of the month."We have the funds in place to