Australian mortgage price changes contributed to seven basis point loan spread increases, according to Westpac's chief financial officer, Peter King. "Lower short term funding costs also contributed," he told analysts at a presentation to discuss the bank's 2016/17 profit announcement. The "mix of flow" in Westpac's mortgage book has also been changing, King said. "We've had more fixed rating lending in the [second] half and lower interest-only flows. Fixed rates counted for nearly one in three deals in the half, which is well up on what we saw last year."Overall, interest only flows were 26 per cent of the portfolio this half - and that, combined with A$19 billion of switching, meant that interest-only lending contracted to 46 per cent of Westpac's portfolio, down from around 52 per cent. "The rate of monthly switching did slow during the September quarter," King conceded, before adding: "We start another round of customer contact before Christmas and this would normally stimulate further switching.""From a credit perspective, the mortgage book's in very good shape with the delinquencies remaining really low," King said. "The key trend is the rise in delinquencies in Western Australia. ... [and] the signs are there that delinquencies have peaked. In contrast we're seeing delinquencies and properties in possession higher in Queensland and that mainly relates to regional areas impacted by the mining slowdown. A high proportion of borrowers sit in the less than 60 per cent dynamic LVR bucket. The borrowers who don't improve their position over time are of concern to king, although this was a small part of the portfolio, he said. "More recent vintages have been subject to tighter lending criteria, including applying a 7.25 per cent interest rate when we're modelling affordability for new loans."