Ireland should consider tackling its huge problem of mortgage debt by writing off or forgiving borrowers a slice of their home loans, a leading economist at the Organisation for Economic Co-operation (OECD) has said.

OECD economist Christophe André, the world's leading housing expert, told the Sunday Tribune that his new survey of world housing markets showed Irish households carry among the largest mortgage debt in the world after home prices here shot up the fastest of any country in the past 15 years. He said a carefully targeted scheme for the unemployed or low income earners who are unable to meet their mortgage payments could be carefully designed to limit the cost to the exchequer and banks.

André's comments come as economists and housing experts here have for the first time calculated the cost of an affordable National Asset Management Agency-style (Nama) scheme for stressed residential borrowers at about €4bn. Economists say that not dealing with the mortgage debt problem will set off a ticking time-bomb and halt any chance of economic recovery here.

A Nama for residential borrowers in serious arrears because of unemployment could forgive up to half the outstanding mortgage debt.

Michael Dowling of the Independent Mortgage Advisers Federation has written to finance minister Brian Lenihan saying that the cost of not tackling the mortgage debt was storing up huge problems that will drag consumer spending and the economy below the water for years. "Though welcome, moratoriums are just delaying the evil day but not doing a Nama-style scheme for people in debt is burying our heads in the sand," he said.

Dermot O'Leary, chief economist at Goodbody Stockbrokers, said tackling the residential mortgage debt problem through debt forgiveness will likely save money in the longer term. "It is akin to the cost of the banking crisis. In many cases it costs more to do nothing than to deal with it upfront," said O'Leary.

Over 44,000 households faced serious arrears in meeting their mortgage payments on €8bn of mortgage loans, the Financial Regulator said before Christmas. Since then rising joblessness has made the mortgage debt crisis even worse.

André warned that any scheme would need to be tightly targeted to prevent so-called 'moral hazard' or people who have been reckless in their borrowing.