Home loans arrears in Western Australia are "the highest since our records began in 2005," Moody's Investors Service said in a gloomy report on Australian residential mortgage-backed securities released yesterday.The proportion of residential mortgages that were more than 30 days in arrears increased to 1.62 per cent in May 2017, "the highest rate in five years", and up from 1.50 per cent in May 2016, Moody's said - adding that "we expect mortgage delinquencies to continue to increase through the remainder of 2017."In WA, the rise is from 2.33 per cent in May 2016 to 2.96 per cent in May 2017.The trend is brighter in the south-east of Australia, with arrears down seven basis points to 1.39 per cent in Victoria and down six bps to 0.99 per cent in New South Wales.Reinforcing themes aired in its downgrade of the ratings of 12 Australian banks and their affiliates three months ago, Moody's said "high household leverage poses a downside risk for mortgages performance in Australia. "While house prices in Australia have increased by an average of 30.2 per cent over the three years to July 2017, average weekly earnings have increased just 4.99 per cent."The "large differential between house price and wage growth — particularly in Sydney and Melbourne where house prices have increased the most— means that households have had to take on more debt to fund home purchases," Moody's said.