UPDATE 1-Irish mortgage data suggests housing debt crisis may be easing
* Home loan arrears 12.9 pct in third quarter from 12.7 pct
* Early arrears of less than three months fall 6 pct
* Employment, housing data show problems easing
DUBLIN, Nov 28 (Reuters) - The number of Irish mortgages in arrears for over 90 days rose at a slower pace in the third quarter and fewer borrowers fell into early stage arrears in a tentative sign that the home loan crisis may be stabilising.
Households' bad debts are a major impediment to Ireland's hopes of economic recovery as it comes out of an international bailout next month, deterring spending and raising questions over whether banks will need more capital.
It was Ireland's spectacular property boom, financed eagerly by banks, that drove Ireland to seek international help in late 2010.
At the end of this September, almost one in five home loans, worth 25 billion euros ($34 billion), were still not being fully repaid with 12.9 percent in arrears for more than 90 days, up a touch from 12.7 percent at end-June and 12.3 percent in the first quarter.
But the number of residential accounts in early arrears of less than three months declined by 6 percent, the central bank said, meaning the total number of home loans in arrears fell to 141,520 from 142,892 three months earlier.
"I don't think you can call (the figures) encouraging, sheerly by the scale of the problem, but it can be now said that the improving economy, particularly in the labour market, looks to be putting a lid on the deterioration," said Dermot O'Leary, chief economist at Goodbody stockbrokers.
"The problem now is the stock of distressed loans rather than the flow of mortgages going into distress but obviously there is a large stock that financial institutions will have to work through and restructure."
Data earlier this week showed that unemployment fell at its fastest pace in four years in the third quarter, to 12.8 percent, while separate figures showed annual house price growth hit a six-year high of 6.1 percent in October.
However retail sales fell by 0.9 percent in October from a year earlier, figures from the Central Statistics Office showed on Thursday, suggesting consumers are still constrained.
Home loans in arrears of over 720 days now constitute 23 per cent of all accounts in difficulty, the central bank data shows.
A further 11 billion euros of investment property loans are also in distress with the proportion of buy-to-let mortgages in arrears for more than 90 days now standing at 21.2 percent compared to 20.4 percent at the end of June.
The central bank has increased pressure on lenders, requiring banks to conclude sustainable agreements with 15 percent of customers in arrears over 90 days by the end of this year, rising to 25 percent by next March. It said 23,776 new restructurings were agreed during the quarter.
Allied Irish Banks also said recently that the pace of new impairments in its mortgage book slowed in the third quarter while Bank of Ireland said total arrears had stabilised and the level of early arrears was declining.