Homeowners struggling to move because of negative equity may find it easier to get mortgages after the financial regulator said a pilot scheme was to be extended across the banks.

Matthew Elderfield said negative equity was likely to remain an “unpleasant reality” in Irish society and banks had to come up with a better way to support those who found themselves stuck because of the collapse of the property market.

“Frankly, the Irish taxpayer does not have the financial resources to somehow eliminate or reduce negative equity in the mortgage market, either directly or through the banking system, but it does not need to do so in order to tackle arrears,” he said.

He said banks would be encouraged to consider negative equity mortgages following an unadvertised pilot scheme at two banks last year.

Last month, Bank of Ireland and Permanent TSB confirmed it had been given permission by the Central Bank to offer negative equity mortgages in limited circumstances since the middle of 2011.

Negative equity mortgages could be a help to those who bought at the peak of the property cycle in 2004 to 2008 and have found more than 50% of the sale price wiped off the value of their home.

The mortgages will not be advertised and will only be offered on the basis of affordability.

Applicants are likely to need to show they have a deposit for their new home before any bank will consider this.

Mr Elderfield said the Central Bank, of which is deputy governor needed to "adapt its approach to make provision of negative equity mortgages easier".

He added: "We will not set prescriptive standards in these areas, but will look to see that lenders are taking a reasonable and controlled approach."

Negative equity is not the equivalent of financial difficulty, Mr Elderfield noted. Some 40 per cent of homeowners are in negative equity, but 93 per cent of such borrowers are continuing to pay their mortgages as normal.

On negative equity mortgages where a borrower could bring some of the debt with them in a new loan, Mr Elderfield said the pilot scheme begun with two banks was now being extended to all lenders.

Mr Elderfield was speaking at a gathering of the harvard Business School Alumni Club in Ireland.