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UPDATE 1-Australia's Westpac Q3 stressed loans dip

(Adds context, details in CET1 ratio, shares)

Aug 21 (Reuters) - Australia's Westpac Banking Corp said on Monday its stressed assets edged slightly lower during the third quarter, despite a rise in mortgage delinquencies.

In a limited third-quarter update, Australia's second-biggest bank by market value said stressed assets slipped four basis points to 1.10 percent of total lending, although repossessions increased due to prolonged weakness in the mining states of Western Australia and Queensland.

The fortunes of Australia's "Big Four" banks are closely tied to the performance of the housing market, with the group holding a combined market share of more than 80 percent of the lending market.

The bank will report full-year results in November.

Housing prices in the most populated cities of Sydney and Melbourne have proven resilient, underpinning strong quarterly results across the banking sector.

Rivals Commonwealth Bank of Australia, Australia and New Zealand Banking Group a and National Australia Bank all reported a decline in expenses related to bad debt earlier this month.

Westpac, which posted a record first-half cash profit of A$4 billion ($3.17 billion) in May, did not disclose profit or revenue numbers in its update.

Westpacs common equity Tier-1 capital ratio was steady at 10 percent at the end of June.

Australias second-biggest bank by market values shares fell about 13 percent during the quarter-ended June 30 hurt by a levy slapped on the countrys biggest banks by the Australian government.

($1 = 1.2612 Australian dollars) (Reporting by Shashwat Pradhan in Bengaluru; Editing by Stephen Coates)