The Government has failed distressed borrowers and is more concerned with protecting the State's banks, the head of the Free Legal Advice Centre (FLAC) Noeline Blackwell has said.

She said the Government had done little to address the worsening mortgage arrears crisis, the extent of which was highlighted by figures published by the Central Bank today.

She said the banks had been given everything they wanted while borrowers had been cast adrift.

According to the new figures, the number of mortgages more than three months in arrears continued to rise in the first quarter of the year.

Some 12.3 per cent of mortgages had fallen behind in payments for more than 90 days by the end of March.

More than 18,200 home loans are in arrears of between 90 and 180 days, with some 77,349 mortgages falling into arrears of more than 180 days, the Central Bank said.

Early arrears - up to 90 days - showed a slight decline from the previous quarter, falling by 0.7 per cent to 46,564.

That brought the total number of home loans in difficulty to more than 142,000.

Buy-to-let mortgages also showed difficulty, with 29,369, or 19.7 per cent, falling into arrears of more than three months compared with 28,366, or 18.9 per cent, at the end of December.

Some 910 properties had been repossessed by the end of the quarter. However, that figure could rise under the new Central Bank Code of Conduct on Mortgage Arrears due to be published next week.

"The numbers in arrears of more than two years has increased by 12 per cent over the last quarter and these deep arrears will be very hard to clear," Ms Blackwell said. "There are 95,000 households in very serious difficulties and that equates to hundreds of thousands of people which is a very big problem in a country of this size and it is not going to be just a debt problem but a major housing issue too."

Ms Blackwell said the banks had got every single thing they wanted in the new code of conduct.

Under the code a current 12-month moratorium on legal action which protects homeowners vulnerable to repossession is to be removed and any house owner who leaves the Mortgage Arrears Resolution Process will have two months before legal action can be taken against them.

It also reduces the protection to homeowners from excessive contact from banks. While existing rules stipulate lenders can only contact borrowers three times a month, this has been dropped in favour of “proportionate” contact and lenders will be allowed to pay an unsolicited visit to a borrower’s home for the first time.

Tracker mortgages, also protected under the current code, will now be vulnerable as part of the renegotiation process.

“This code will allow them to speed up repossessions if they want to or to do as they see fit,” Ms Blackwell said. “The real problem is that as a result of Government decisions banks can act on a case-by-case basis with absolutely no independent appeals process for borrowers.

“The power imbalance between lenders and borrowers has increased rather than diminished,” she added.

She claimed the Government was more concerned about protecting the banks than individuals or society. “We are years into this recession and still have not seen a proper response from the Government.”

Fine Gael's junior minister in the Department of Finance Brian Hayes defended the Government's approach and claimed dealing with mortgage arrears was "the number one issue this year".

Mr Hayes said as the banks unveiled their solutions “in a realistic way we are going to see these figures improve”.