Mining downturn causes mortgage stress for Australian banks

Job losses in Australia's resources sector have caused more mortgages in Australia's mining region to fall in arrears, potentially highlighting the risks to Australia's banks from the slump in commodities.

"The slowdown and job cuts in the mining industry have hit non- metropolitan regions in the outback of Western Australia, in Northern Territory, and in the north and outback of Queensland," the Fitch Ratings report, released on Wednesday said.

"It's the worst performing region, but in the past we've had worst performing regions with a higher delinquency rate," Fitch Ratings analyst James Zanesi told Fairfax Media on Thursday.

After the Global Financial Crisis, the Gold Coast and areas of Western Sydney had reached arrears highs of 2.5 and 2.6 percent, Zanesi said.

The booming housing market and low interest rates have offset Australia's historical areas, notably in the west of Sydney, of highest loan delinquency rates.

Zanesi told Xinhua on Thursday that overall however, the mining sector only accounts for approximately one percent of housing mortgages, and that Australia's banks are more exposed to the country's construction sector.

Australian Bureau of Statistics figures, released on Thursday, show that Australia's capital expenditure had fallen more than expected, with mining construction leading the falls, down 10.9 percent.

Overall, Australian business investment fell by 4 percent in the June quarter, worse than market forecasts. Endi