The numbers of homeowners in mortgage arrears of over three months has fallen for the first time in almost five years but those behind in repayments by more than two years has risen, according to the latest tranche of figures released by the Central Bank.

A total of 96,474 mortgages - or 12.6 per cent - were in arrears of more than 90 days during the final three months of last year, a decline of 2,262 compared to the previous quarter, the Central Bank said. It is the first time the upward trend has been reversed since September 2009.

The outstanding balance on mortgage accounts in arrears of more than 90 days was €18.2 billion at the end of the year, equivalent to 16.9 per cent of the total outstanding balance on all residential mortgage accounts.

The Central Bank warned that the decline in the overall number of arrears cases, masked continuing increases in very long-term arrears and while the number of accounts in arrears of between 90 and 720 days fell by just over 4,000 in the last three months of last year, accounts in arrears of over 720 days increased by 1,755 over the same period.

All told there were 33,589 mortgage accounts with arrears of greater than 720 days as the end of last year which corresponds to outstanding balances of €6.9 billion. These accounts represented almost 63 per cent of outstanding arrears on mortgages.

A total of 84,053 residential mortgages had been restructured by the end of the fourth quarter, a 4.3 per cent increase on the previous quarter. Of these, 79.3 per cent were deemed to be meeting the terms of their current restructure arrangement. The largest increases in restructures were recorded for arrears capitalisation and split mortgages, while the largest declines related to interest only arrangements.

There were 168 properties taken into possession by mortgage lenders during the quarter, of which 63 were repossessed on foot of a Court Order, while the remaining 105 were voluntarily surrendered or abandoned. Lenders were in possession of 1,014 repossessed properties at the end of last year, of which 503 were buy-to-let mortgages.

Goodbody economist Dermot O’Leary Mortgages said the fall in arrears of more than 90 was a sign “stress in the system is easing, albeit from very high levels” He warned that there were “still large legacy issues that the banks have to deal with” and h highlighted the increase in arrears of more than 720 days. “This highlights the need for realistic sustainable solutions to be put in place for those in late stage arrears,” he said and suggested that “questions remain about appropriateness of restructuring solutions”.

David Hall of the Irish Mortgage Holders Organisation (IMHO) called for "an urgent investigation" by the Central Bank into what banks were classifying as long-term sustainable solutions. "While there is a minor reduction in the numbers of those in short term arrears, there is however a very concerning trend of those in long term arrears being ignored in favour of banks choosing easier arrears cases to solve," he said.

Seperately, the IMHO and KBC Bank Ireland have agreed an initiative to provide advice and negotiation services to mortgage holders who are in arrears or pre-arrears. Under the agreement KBC mortgage holders will receive a free advisory service and independent financial advice on their mortgage situation and be provided with a facility for negotiation with KBC. The service will be provided from a dedicated IMHO office and will be funded by KBC for an initial six month period. Mr Hall said the service wold be "completely independent with the staff provided by the IMHO."