Genworth Mortgage Insurance Australia predicts its loss ratio this year will be higher than previously expected, due to a deteriorating housing market.

The company, which reported a 38.9% slide in third-quarter profit, has updated its loss ratio guidance to 50-55%, compared with the half-year outlook of 40-50%.

“Our [third-quarter] result reflects the continued trends of softening cure rates from a moderating housing market, tightening credit standards and increases in mortgage interest rates,” CEO Georgette Nicholas said.

Net profit fell to $19.6 million from $32.1 million for the period to September 30, while gross written premium increased 3.6% to $92.1 million, reflecting growth in traditional lenders’ mortgage (LMI) insurance business.

Net earned premium dropped 32% to $68.1 million as changes that have lengthened the time period over which premium is earned affected comparison figures.

Sydney and Melbourne are expected to continue leading a moderating trend in the housing market, while the decline in mining regions of Queensland and WA is likely to stabilise.

Genworth says it is moving ahead with a program to enhance its product offering, while technology improvements are delivering benefits.

Early last month it launched an automated underwriting decision platform and data-only submission portal that will enable LMI approvals to be made in real time, it says.

“We have a track record of delivering solid profits and strong capital returns to shareholders, which we are committed to continuing,” Ms Nicholas said.

Genworth’s key customers include NAB, which has a contract up for renewal.

“We have a long-standing relationship with NAB and we are in discussions,” Ms Nicholas told a results briefing.