Forbearance policies imposed on the banks helped cut home-loan repayments almost in half last year as lenders made extensive efforts to stave off arrears.

According to new Irish Banking Federation figures, mortgage repayments were down to €8.5bn last year from €15bn in 2008, a drop of 43%.

"The overall book is staying pretty flat where you would have expected it to shrink, since there is so little lending," said Davy banking analyst Emer Lang. "It's quite stark."

Davy said in a research note last week that this is indicative of significant loan restructuring as the banks are committed to showing forbearance both through the Irish Banking Federation and new government rules on repo- ssessions.

Another drag on mortgage repayments could be the way borrowers are now treating short-term debt in the absence of new credit back by home equity. "Thousands of consumers regularly added short-term revolving debt to their mortgage," said Ciaran Phelan, chief executive of the Irish Broker Association.

The Oireachtas Committee on Social and Family Affairs has proposed extending the grace period protecting borrowers from repossession from one year to two, but the industry response has been lukewarm. "Extending the moratorium will simply extend the tail of mortgage losses," said Lang. "When rates go up you'll get a spike in arrears anyway. That's going to hurt no matter what."