The New Zealand government-owned Kiwibank's profit growth slowed in the June quarter although its share of the mortgage market continued to grow strongly.The bank's fourth quarter profit rose just three per cent to NZ$5.1 million, bringing its full-year result to NZ$25.5 million, up 61.4 per cent on the previous year."The mortgage market has been challenging in that quarter," said managing director Sam Knowles. "People have largely stopped doing things unless they have to do them as interest rate rises have started to come through."Even so, the bank's mortgage book grew by NZ$340 million to NZ$3.48 billion in the three months, taking its market share to 2.5 per cent from 2.33 per cent three months earlier and from 2.07 per cent in June 2006.Knowles said continued investment, including the acquisition of nearly NZ$700 million in AMP-branded home loans from HSBC from July 1, had also curbed profit growth. "We're building a platform. That has quite a cost." Under new accounting rules, those costs are being written off in the year in which they fall.He said that with spring having arrived, people may start "re-thinking their mortgages. We're expecting it will be a reasonably tough market. Our strategy has always been to steal our competitors' business, not to rely on organic growth of the market."Kiwibank also owns 51 per cent of New Zealand Home Loans but Knowles said its contribution to the current result wasn't large. While there were a few pilot loans written before Christmas, NZHL didn't fully switch to Kiwibank funded loans (previously, Sovereign provided the funding) until February and March, he said.Knowles said Kiwibank is likely to "have a really good look" at dealing with mortgage brokers generally in about a year.The bank is already dealing with brokers with the AMP branded loans and is also participating in the www.fundit.co.nz mortgage auction site."We certainly see mortgage broking as the marginal business in mortgage lending. It's what you do when you've run out of all your other strategies," Knowles said."It's generally lower margin and lower value loans because the duration of the loans is lower."The big challenge for mortgage brokers "is to be able to prove that the value of the loans they're originating is as high or higher than the loans the bank is originating.Brokers tend to focus more on volumes than on the value of loans," Knowles said.