The disparity between mortgage markets around Australia is laid bare in the latest research from Moody's Investor Services, which shows mortgage delinquencies at five-year highs in May.

The proportion of mortgages in arrears was 1.62 per cent in May, up from 1.5 per cent for the same time in 2016. Moody's says it expects arrears will continue to rise.

“We expect delinquencies to continue to increase through the remainder of 2017, as weaker conditions in states reliant on the mining industry, high underemployment, and less favourable housing market and income dynamics will continue to drive the rate higher,” said Alena Chen, a Moody’s vice president and senior analyst.

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While overall, the picture looks bleak, no mortgage payments were missed in Sydney and Melbourne in May. But 7.5 per cent of home loans in Western Australia were overdue, the Moody's report said.

Mortgage delinquencies increased to record levels in Western Australia, the Northern Territory and South Australia, and also rose in Queensland and the ACT year on year.

The Moody's research looks at mortgages that are bundled into financial products and sold to investors.

Read more about the Australian mortgage market:

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