| 15.4°C Dublin

Banks are putting off judgment day

over 150,000 mortgages -- more than a fifth -- are either in arrears and/or have been restructured and at least 60pc of home loans are in negative equity.

Clearly something has to be done about mortgages.

With house prices having fallen by an average of almost 50pc and about half of all mortgages being loss-making trackers, mortgage loan books of the banks are now in a similar state to their property and construction loan books four years ago.

The banks still insist that everything is hunky dory but no one else believes a word of it.

Irish banks have just under €100bn of mortgages on their books. Throw in the mortgages of the Irish subsidiaries of foreign-owned banks and the total rises to over €130bn.

The banks are probably looking at total mortgage losses of between €30bn and €50bn for Irish banks and total losses in the region of €39bn to €65bn.

That would be like NAMA all over again -- but this time the State wouldn't have the resources to bail them out.

The latest idea is split mortgages where a portion of the loan is "parked" in the hope that something will happen over the next few years and spare the banks the need for massive write-downs.

That something, though no one is yet prepared to say so publicly, is Ireland leaving the euro.

If that happened there would be an upsurge in inflation which would write down the real value of Irish mortgage debt but ensure that banks were repaid most of what they are owed in nominal terms.

Otherwise split mortgages make no sense, either for the banks or the homeowner. If we stay in the euro, all that happens is that the banks postpone recognising losses that will eventually destroy them.