ANZ Bank’s sluggish run in the home loan market continued into the latest quarter, with its mortgage book contracting in the three months to June.

In a market update on Friday, ANZ said the value of outstanding owner-occupier home loans slipped by 0.2 per cent in the quarter compared with the March quarter, while the investor loan book shrank by 1.8 per cent.

ANZ has previously admitted it was too cautious towards mortgage lending, which caused the home loan book to shrink earlier in the financial year, and it has taken to loosen some policies in response.

The bank’s group executive for retail and commercial, Mark Hand, said loan application volumes had improved more recently, after it cut loan approval times, gave its bankers and brokers greater clarity on its credit policies.

Mr Hand also said a promotion offering frequent flyer points, and a competition to win $500,000, had helped lift its application numbers.

ANZ’s total provision charge was $209 million, which it said was “broadly flat” compared with quarterly average from the first half.