Ireland's government has rejected calls for a blanket debt forgiveness scheme to help stretched borrowers and is instead signalling the banks can deal with the problem after they have been recapitalised to the tune of 70 billion euros (61 billion pounds).
"The capital is in the banks to allow the banks to write off some of that debt, so it's a manageable problem -- but it is very onerous on certain individuals and the government will deal with it," Noonan told Newstalk radio ahead of the government's first cabinet meeting following the summer break.
"It has to be dealt with at policy level. We have already in answer to the crisis as it developed brought out a number of measures to ease the burden on people but as it proceeds now extra measures are required."
Reuters reported that the number of mortgages in arrears or restructured due to financial distress has jumped 10% in the second quarter from the previous three months, heaping pressure on the government which needs to introduce yet another austerity budget in December.
Concerns has grown about banks across Europe suffering from the fallout of three years of financial turmoil, and the head of the IMF warned at the weekend that the financial sector may need further forced recapitalisation.
Ireland's banks have been recapitalised to deal with nearly seven percent of their combined residential mortgage book being written off.
Data released on Monday showed that 12% of Ireland's residential mortgage market was either in arrears or had been restructured.
The ruling coalition has promised to examine ways to ease the burden on mortgage holders in arrears but it is waiting for an expert group's report on the issue, due to be published next month, before making any major decisions.
Brian Hayes, Ireland's junior minister in the department of finance, told Reuters last week that legislation to restructure mortgage debt was a likely option.
Allied Irish Banks (ALBK.I) has called for an industry-wide agreement on restructuring for struggling mortgage customers.
