Lenders will have to find new ways to increase the profitability of their mortgage businesses in response to a sustained reduction in housing credit growth rates, according to a mortgage industry report released yesterday.The latest JP Morgan and Fujitsu Australian Mortgage Industry Report said that single-digit growth in home lending has become the industry's "new dynamic".JP Morgan banking analyst Scott Manning said: "Credit growth in likely to remain lower for longer; retail fees have been re-based, and business credit growth is deferred. The focus will be on improving profitability at lower levels of growth."According to the latest official figures, over the 12 months to February, total monthly dwelling commitments fell by 5.6 per cent - from A$20.8 billion in February last year to $19.3 billion a year later.Manning said: "We expect system housing credit growth to remain in the mid to high single digits over the coming years. The coming 12 months are, however, likely to be fragile, with growth at the lower end of this range."Manning said this "fragility" was due to several factors: house prices have plateaued; housing starts are falling, and lending underwriting standards have tightened.In addition, household leverage ratios are on the rise again. As a result of last year's interest rate increases, household interest payments as a percentage of disposable income have increased from eight per cent in 2008 to 10 per cent today - close to the high of 11 per cent in 2007.Fujitsu Australia's executive director, Martin North, said lenders had paid little attention in the past to understanding the needs of different customer groups, but this would have to change.North said: "There is a need to change from product-push to customer-pull strategies. This entails tailoring and targeting propositions to specific customer groups based on their needs, preferences and values."North cited NAB's UBank online strategy as an example.Manning said the recent intensification of competition in the home loan market, with offers of higher loan-to-valuation ratios and bigger package discounts, would do little to change market dynamics. "These are big ships and it takes a long time to turn them around," he said.