Irish banks could sell some of the €50 billion in tracker mortgages on their books to the European Central Bank, but it looks like the mortgages would need to be guaranteed by the Government.

The ECB yesterday published details of its asset-backed securities programme through which it will buy certain assets from banks.

This will free up cash for new lending to consumers and businesses.

Fine Gael MEP Brian Hayes - until recently a minister of state at the Department of Finance - said ECB president Mario Draghi had confirmed recently in the European Parliament that the ECB may be open to buying Irish tracker loans. 

Mr Hayes has called on the Government to make a case to the ECB for including the trackers, possibly through a new state guarantee.

"The exposure of trackers mortgages, representing almost two thirds of the total number of residential mortgages, is holding back Irish banks' profitability and the potential for lending into the real economy," he added. 

Bank of Ireland, AIB and Permanent TSB have just under €50 billion of tracker mortgages sitting on their balance sheets. These mortgages track the main ECB interest rate which is at a record low of 0.05%. 

"We need the help of the ECB to constructively engage with our Government in trying to find a solution to the tracker problem. The reduction in the ECB interest rate is good news to Irish mortgage holders. But the problem of over-exposure of Irish banks to tracker mortgage needs to be solved," he concluded.