The bank said it is very concerned about a €9.3bn mortgage debt mountain in the main banks.
A review of the most up-to-date data has found one third of accounts for primary homes that are in arrears for more than 90 days are actually behind in repayments for almost two years. The loans were worth €6bn at the end of June.
“The rapidly growing proportion of loans in this category is a source of serious concern, as these loans are effectively over two years behind on their repayments, and the scale of potential losses on these loans could be quite significant,” the report found.
“It also indicates that the various resolution strategies implemented to date have, thus far, had little impact on longer-term arrears.”
Ross Maguire, barrister with the New Beginnings group, said there is no way the arrears crisis can be solved without debt write- offs: “Unless everyone wins the Lotto, this isn’t going away. It is simple mathematics; debt write-offs are coming.”
The value of mortgages in the buy-to-let sector which are behind in repayments to the same extent, two years or 720 days, is €3.3bn.
The Central Bank revealed the scale of the problem after seeking more detailed data on arrears from Bank of Ireland, Allied Irish Banks, Ulster Bank, and Permanent TSB.
Mr Maguire said: “There is a group of people that gave up and they are goosed. It is all well and good to take their house away but what happens to the balance. These people have given up and it’s not good for them or the banks. They are drowning in debt, it’s coming for them at all angles.”
The regulator revealed that arrears of more than 180 days experienced the most significant increase since it began keeping records in 2009. The value of these mortgages increased from €3.2bn to €15.6bn by the end of June.
Overall, in the four years since arrears data started being calculated, the scale of debt-hit homeowners has grown to €18.6bn (£15.5bn) by the end of June — 17% of the market.
The Central Bank said the acceleration has been dramatic by international standards, even if the impact of the recession is taken into consideration.
The review found that the level of arrears of 90 days or more in the buy-to-let sector was valued at €8.7bn at the end of June — 29% of the total outstanding balance on all these type of investment accounts.
The Central Bank found 23,500 mortgages, where the house is the principal residence, were restructured in the second quarter of 2013. More than half of these have been put on interest-only and reduced payment plans.
The Central Bank analysis found that early arrears figures have been on a downward trajectory since the end of 2011.
It warned that the various options offered by banks to resolve mortgage problems have so far either failed to tackle the problem effectively or not targeted the longer term debtors.
The data was published as part of the Central Bank’s latest quarterly bulletin.