Newcastle Permanent Building Society, the second largest in the sector, says its lending levels are down on 2006 but not by much."Although we are not at the same position we were at last year with new acquisitions (of mortgage loans) we are not far from it. We haven't really deviated much off our course," said Newcastle Permanent acting chief executive Terry Millett.Millett said new loan applicants tend to seek more certainty by fixing rates."We have not found that we have been losing existing members due to our competitiveness, but where we do see a problem is attracting new members. "We operate through two key mortgage brokers and our own sales force, and we have stayed competitive and are running quite close to where we expected to be."It is obviously heightened conditions at the moment, and we are reasonably happy the way we are travelling."For the first quarter of the financial year, in common with most institutions we started to see the ramifications feeding through from the credit market adjustment which has been going on primarily since that August/September period, and a key ramification for all institutions has been the portion of funding from the wholesale market."Newcastle Permanent raised US$300 million wholesale funds via a bond issue in October consisting of a US$100 million tranche of seven year bullets with a 6.47 per cent coupon, and a US$200 million tranche of ten year bullets with a 6.79 per cent coupon. Funding for the building society is a mix of retail deposits, Australian wholesale, and the new US wholesale funds, which accounts for around six per cent of overall funding.According to Millett, the US funding is "designed to have an overall longer term funding in our funding mix"."This was for diversification, and also to have a foothold and a reputation that US investors would be comfortable dealing with. "For an institution which is on a growth path like ours, to grow itself, going over and establishing credentials in such a deep market as the US has a lot of merit."This will serve the organisation well over the next three to five years as it grows."Millett added that deposit growth is running ahead of expectations for the current financial year.