Central Bank Governor Patrick Honohan has urged banks to move more quickly to repossess investment properties whose owners are struggling to repay debt.

He also said banks should try to come to arrangements with struggling home-owners that do not require the use of the proposed new legislation on personal debt.

The Central Bank Governor told the Limerick Law Society the Central Bank had been encouraging banks to engage with borrowers, and had increased its monitoring of these efforts.

Professor Honohan said that, until this happened, there was a risk that far too many debtors would bypass "what should be in most cases a more efficient way of working out their problems" and proceed directly to the new insolvency procedures being proposed.

He confirmed that the Central Bank was reviewing the guidelines on this issue - the Code of Conduct for Mortgage Arrears - to see if any elements need to be "refined" to avoid hampering banks' engagement with borrowers.

Professor Honohan said the number of home repossessions in Ireland was very low, adding that there was every reason to delay such a move as long as possible. But he said banks should be less inhibited about repossessing properties bought for investment.

"It is surely now past time for the banks to be dealing more proactively with the situation of over-indebted buy-to-let borrowers no longer able to service the debts they assumed in order to take investment positions - now loss-making - in property," he said.

The Governor said that, while this may involve the banks having to manage a portfolio of repossessed buy-to-let properties, this should facilitate the improved functioning of the property market.