The number of Irish mortgages in arrears of 90 days or more is continuing to accelerate, according to Fitch.

The rating agency, which bases its calculation on transactions linked to 12 Irish residential mortgage-backed securities, said arrears rose to a record 18.4 per cent of the total loan stock in the first quarter of 2014, up from 16.7 per cent last year.

The increase was primarily driven by poorly performing loans in the buy-to-let sector, it said.

The finding runs counter to the latest official figures from the Central Bank, which indicated mortgage arrears of three months or more had declined for the first time since the property crash.

In March, the bank reported a fall in arrears in both the principal dwelling and buy-to-let sectors for the final quarter of 2013.

The bank bases its figures on loan data directly from the country’s main lenders.

Andrew Currie, managing director at Fitch's structured finance team, said: "There are signs that lenders are becoming more willing to consider taking properties into possession."

“As the legal process becomes more certain, lenders have begun to selectively enforce their security over properties.”

“However, it is clearly still the last resort as the number of cases remains extremely low, especially relative to the amount of distress in the market.”

In its report, Fitch noted that Ireland had experienced significant house price increases in the past year, driven primarily by demand in Dublin.

“We expect lenders to negotiate partial loan write-downs for selected borrowers, with the intention of making them sustainably affordable,” Mr Currie said.

“Lenders will retain the right to recover the full loan amount in the event that property values rebound sufficiently in the long term,” he added.