Ireland's banks have enough capital to deal with the difficulties presented by borrowers struggling to meet mortgage repayments, Central Bank governor Patrick Honohan said today.

He urged lenders to "ramp up" efforts to deal with unsustainable home loans.

"Insufficient capital cannot be a reason for inaction," said Mr Hononan at an event in Dublin this morning.

"To date banks have restructured relatively few loans," he added before calling on lenders to increase efforts to work with struggling mortgage holders.

About 32,000 households are estimated to be in arrears for more than six months on their mortgages.

The Inter-Departmental Working Group on Mortgage Arrears, which published its widely anticipated report yesterday, has proposed the introduction of two “mortgage to rent” social housing schemes. These would mean approved housing agencies taking ownership of homes in specific circumstances or the leasing of houses by banks to local authorities, which would in turn rent them to former owners.

However, there will be no blanket debt or negative equity forgiveness programme.

The report said it would cost in the region of €14 billion to clear the negative equity in the Irish mortgage portfolios, while tackling the mortgages taken out between 2006 and 2008 would cost in the region of €10 billion. It added that 50 per cent of the arrears to date are outside the Covered Banks.

Additional reporting: Bloomberg