The Central Bank has said proposals to allow banks to remove tracker mortgages from borrowers in serious arrears are designed to help people stay in their homes and avoid repossession.

The Central Bank's director of consumer protection, Bernard Sheridan, said the proposal in the draft code of conduct on mortgage arrears only applies to people who are in danger of losing their homes.

He said there is no doubt that the tracker is a very good product for the borrower in arrears, because it is charged at a low interest rate and therefore allows the mortgage to be sustainable

But he said that in the small number of cases where the mortgage is unsustainable and is heading towards repossession, he says it may be better to see a deal being done with the bank and the borrower where they both agree to convert the value of the tracker into actually writing down the debt.

This would make the mortgage sustainable and would allow the person stay in the home, he explains.

Mr Sheridan said the Central Bank had received a lot of submissions on the draft code, adding that it will consider them all and come to a final conclusion over the next couple of months.

Under the current statutory code of conduct that has been in place for banks since 2010, lenders can not force a borrower whose tracker mortgage in arrears to give it up.

The Central Bank said it is reviewing the code in a bid to strengthen the protection it affords consumers, and to facilitate better resolution of mortgage arrears problems between borrowers and the banks.

Meanwhile, the Money Advice and Budgeting Service has said that increasing numbers of older people, who should be almost finished paying their home loans, are now getting into mortgage arrears.

A new report by MABS has found that - contrary to the general view that most of those in mortgage arrears are in their 30s - 60% of the agency's clients are between the ages of 41 and 65.

It also showed that clients of MABS in such difficulties were more likely to be unemployed, have multiple debts in addition to the mortgage, and be mortgaged to a mainstream lender.

The national development officer with MABS, Michael Culloty, said that people have not paid off their mortgages because of products that were offered to them in the past.

''They were allowed to borrow on the equity that was in their property; they probably bought a second property and they probably bought to consolidate other loans, or to move house,'' he added.