CENTRAL Bank Governor Patrick Honohan has dismissed claims of strategic default among mortgage holders as a "phoney concept".
His comments come a month after the head of AIB said about one in five of those in mortgage arrears were deliberately not making repayments.
But Mr Honohan told the Oireachtas Finance Committee that there were a "huge variety of circumstances" were people were not meeting their house repayments, and said homeowners were prioritising their debts.
"I think it's a phoney concept. There are a huge variety of circumstances were people are not paying their mortgage fully," Mr Honohan said.
"There can be all sorts of reasons for it. They can't afford to pay all of their debts and they've decided, rightly or wrongly, they're going to pay the short-term debt first . . . Is that strategic default? It's people managing their affairs as best they can."
Mr Honohan said that the scale of the mortgage crisis in Ireland had been hard to predict, and claimed it did not expect the banks to be so "persistently ineffective" in dealing with the problem.
He said matters were still not moving as quickly as the Central Bank would like, but that the process was working.
Mr Honohan said the Central Bank's Code of Conduct on Mortgage Arrears (CCMA) provided a strong protection for borrowers who engage with their bank.
"Any bank which is proceeding lightly to legal recourse with cooperating borrowers without satisfying the procedures of the CCMA, or where alternative sustainable arrangements are available, is evidently not acting in a manner consistent with the targets regime," he said.
But Mr Honohan said far too many cases of mortgage arrears remain untreated.