THE CENTRAL Bank has given mortgage lenders until the end of May to categorise their arrears cases and propose solutions for each category.

The banks will have until the end of September to develop these solutions into “products” under a Central Bank timetable. Lenders will then pilot and test the products before introducing them as part of mortgage arrears resolution schemes in October.

All banks offering mortgages have submitted arrears resolution strategies to the Central Bank showing how they intend to deal with customers who are in arrears.

Central Bank deputy governor Matthew Elderfield set out the timetable under which the country’s 21 mortgage lenders must offer solutions detailed in the Government-led Keane report, which advised ways to deal with arrears.

Mr Elderfield has said the Central Bank became increasingly concerned late of last year over the banks’ progress on dealing with arrears cases, and their approach to unsustainable mortgages.

Last year’s Keane report advised lenders to develop mortgage-to-rent products, split mortgages and trade-down mortgages to deal with the problem.

Almost 14 per cent of residential mortgages were either in 90-day arrears or had been restructured on December 31st, up from nearly 13 per cent three months earlier, according to the Central Bank.

A Department of Finance spokesman said mortgage resolution strategies were aimed at lenders addressing arrears informally before the new personal insolvency regime took over, where judicial solutions could be applied. Under the proposed legislation, borrowers can apply for a personal insolvency arrangement where, if approved by 75 per cent of their secured creditors, mortgage debt can be written down in out-of-court settlements.

Central Bank governor Patrick Honohan this week said banks needed to be more aggressive in repossessing buy-to-let properties.

The Irish Bank Federation said a court ruling last year was preventing banks from promptly repossessing properties of individuals who had fallen into arrears.