Over 5% of all credit union loans are now more than 18 weeks in arrears due to a sharp deterioration in loan repayments in the country's 419 credit unions in recent months, according to figures obtained by the Sunday Tribune.

The data, which the Financial Regulator has refused to publish, indicates that credit union arrears jumped by 12% between January and March, a trend which market sources believe is likely to continue until 2010 at least.

It also reveals that, at the end of March, over 8% of all credit union loans were in arrears and no repayments had been received on almost 1.6% of the movement's loan book for more than a year.

It is understood this trend will prompt the Registrar for Credit Unions, Brendan Logue, to issue new arrears guidance to credit unions within the next six weeks.

Logue is due to leave his post next month but there is growing speculation that finance minister Brian Lenihan will extend his term because of the challenges facing the credit unions.

Market sources stressed, however, that credit unions continued to be in far better financial health than the banks. Credit unions have excess liquidity, and the worst lending lapses were confined to a small number of them.

"There are no credit unions which are in danger of folding or defaulting or anything comparable to the banking sector," said Kieron Brennan, chief executive of the Irish League of Credit Unions (ILCU).

He said the rising level of loan arrears reflected the difficult economic circumstances that many credit union members found themselves in. He said the ILCU expected this trend to continue for the rest of this year because of redundancies.

"When people become redundant, they have a certain level of resources, meaning that the full effect only kicks in six months later. This means the current surge of redundancies will have a delayed financial impact on credit unions. So we'll see the trend continuing until at least the first quarter of 2010," he said.

Brennan indicated that the movement had abandoned its ambitions to grow its business lending, which has been responsible for significant arrears at some credit unions during the downturn.

"As a whole, ILCU does not encourage business lending although I would like to differentiate between modest personal lending for self-employment purposes such as someone getting a loan for tools and real business lending," he said.