Moody’s has downgraded three lenders’ mortgage insurers (LMIs) – QBE LMI and two Genworth companies.

QBE LMI’s insurance financial strength rating (IFSR) has been changed to A2 from Aa3.

Genworth Financial Mortgage Insurance is reduced to A3 from A1 and run-off company Genworth Financial Mortgage Indemnity’s IFSR rating has been downgraded to A3 from A2.

Moody’s has confirmed Westpac LMI at Aa3.

All the ratings carry a stable outlook based on Moody’s benign expectations for the economy and housing market.

The ratings agency says it focused on the sufficiency of the lenders’ mortgage insurers’ capital levels in the event of an unexpectedly severe downturn in the housing market – as happened in the US between 2007 and 2011 – and “fundamental characteristics of the companies’ financial profiles”.

It says the “positive attributes of Australian LMIs’ strong franchises are partly offset by their increased dependence on key customers and high levels of geographical concentration, relative to global averages”.

In December Moody’s updated its global methodology for rating LMIs. It says the ratings reflect the strength of parent companies, although it says US-based Genworth Financial Inc provides only modest support.