DUBLIN - Early stage mortgage arrears at Bank of Ireland have flattened over the past three months, chief executive Richie Boucher was quoted as saying on Sunday.

The bank said in a trading update in November that the rate of growth in mortgage arrears was slowing and Boucher told the Sunday Times in an interview that arrears at the early 30- and 60-day level had "flattened" for three months in a row. Ireland's banking sector, which with the exception of Bank of Ireland is fully state owned, has been heavily recapitalised to deal with problem mortgages. But the rising level of these mortgages is seen as the main risk factor that could lead to the sector needing even more capital.

The proportion of Bank of Ireland's owner occupier mortgages in arrears for more than 90 days was the lowest in the industry at the end of June last year, standing at 7 percent compared with 5.6 percent at the end of 2011.

The level of arrears among properties bought by investors to rent out, the most distressed part of its mortgage books, was 14 percent and Boucher said the bank has seen "strong interest" from U.S. investment funds to buy these properties from the bank.

He was quoted as saying that deals would likely be struck whereby funds would buy blocks of 100 or more apartments from lenders.