Rising home loan interest rates may push mortgage stress further into elevated territory in mining regions and other parts of the country with anaemic labour markets, mortgage insurance giant Genworth Financial warned on Wednesday.

According to Genworth, a higher proportion of homeowners in Queensland and Western Australia have fallen behind on repayments, contributing to a 34.7% slide in the insurer’s profits.

While New South Wales and Victoria fared much better, mortgage delinquencies have edged up in these two states, with the latter being particularly hard hit by job losses in the manufacturing industry.

Georgette Nicholas, CEO of Genworth Mortgage Insurance Australia, noted that overall mortgage interest rates remained low, allowing many householders to pay down their loans ahead of schedule. This gives them a substantial buffer against financial shocks. On the other hand, recent mortgage rate hikes that target interest-only customers could put more stretched borrowers at risk.

“The recent re-pricing, and continued re-pricing of mortgage books by lenders, does pressure the serviceability of loans in a low-rate environment, and could cause additional stress in areas where they are already impacted by lower employment,” Nicholas said on a call with investors.

In the coming months, Nicholas said Genworth expects house prices to moderate as a result of the Australian Prudential Regulation Authority’s crackdown on interest-only lending, as well as the recent out-of-cycle rate hikes.

Genworth, which has a 30% share of the mortgage insurance market, is experiencing trends that could also affect the major banks to a certain degree, although lenders are less exposed.

Mortgage insurers sell cover to banks to help shield them from default by riskier borrowers or those with smaller deposits.