Kenny warns banks not to rely solely on interest-only loans to tackle mortgage arrears

The Taoiseach has said he is not happy with how long it is taking banks to deal with the mortgage arrears crisis.

Enda Kenny told the Dáil that banks should not believe the solution is to put everyone on interest-only loans.

It follows an admission yesterday from the Central Bank's chief economist Lars Frisell that financial institutions were still dragging their feet in dealing with mortgage arrears.

At the launch of the bank’s first quarterly economy bulletin of the year Mr Frisell said the individual banks had incentives to avoid restructuring loans and wait for an upturn in the property market.

Mr Kenny says the Government is working with the banks to deal with the 180,000 mortgages in distress.

"The Minister for Finance (Michael Noonan) has met with the banks in the month of January on this very issue."