Irish Life & Permanent, which is loss-making, said there were signs the number of people starting to get into difficulties with their mortgage repayments was levelling off.

However people already in difficulty with their mortgages are getting into deeper water.

Around 4% of Permanent TSB’s mortgage book is in arrears.

It said salary cuts and joblessness is causing damage in the pensions’ market with premiums into corporate pension schemes down by almost one third.

Irish Life & Permanent is holding its annual general meeting later this morning.

Shareholders will hear updates on the company’s plans to shed its loss-making Permanent TSB brand, which is now damaging the wider group.

The survey also finds that 78% of first-time buyers now have the funds required to pay a deposit, which is up 20% from last September.

A similar number have either received or are seeking mortgage approval.

In his analysis of the results, independent economist Paul Murgatroyd, said first-time buyers clearly do not expect market and economic conditions to deteriorate significantly within the next 12 months.

Managing Director of MyHome.ie Angela Keegan said: ‘It is clear that Dublin will be the first market to see increased activity as 64% of first-time buyers wish to buy in the capital.

‘A further 13% are focused on purchasing in the traditional commuter counties of Meath, Wicklow and Kildare.’

However, in an opinion piece in today’s Irish Independent, economist David McWilliams argues that buying a house now makes no economic, financial or social sense, as he believes that houses are still substantially overvalued.

Its quarterly bulletin warns, however, that lower incomes and increased unemployment are likely to continue to hold back consumer spending.

It says there are signs that the economy is stabilising, but it warns that it will be 2011 before growth is strong enough to start bringing unemployment down.

It also says the timing and strength of a recovery very much depends on the performance of the worldwide economy, which will influence demand for Irish exports.

The Central Bank praises the Government’s measures taken so far to deal with the public finances, but warns that any ‘slippage’ from these would damage confidence.

It also urges the Government to give greater detail on how it plans to cut the budget deficit over the next few years.

The report refers to concerns about home owners struggling to pay their mortgages, saying any measures to help them should not

It also said mortgage arrears in Ireland were climbing and stood at 2% of total mortgage loans at the end of March, compared with 1.5% at the end of December.

However, AIB said that when the bad debt charges were excluded its trading profits so far this year were ahead of the same period last year.

The Cabinet will meet in Government Buildings this morning for a final discussion on the Budget, but at this stage the decisions have already been taken.

After ten sessions, Ministers hope they have a package that can start the recovery of the national finances and will commend itself to the public and the international markets.

Last night, Minister Lenihan said the tax base had declined dramatically and has to be repaired.

He said everyone will make some contribution, though those who have the most will pay the most.

Mr Lenihan is keenly aware that taking too much money out of the economy could create a deflationary spiral, while not taking enough may lead international markets to doubt the Government’s resolve.

The Budget is expected to set out a three- to four-year framework for restoring the public finances.

The figures were contained in the latest University of Ulster Quarterly house price index, produced in partnership with the Bank of Ireland and the Housing Executive.

The survey showed prices had fallen by just over 28% in 2008.

It also confirmed the continuing low volume of house sales, with 704 transactions recorded in October, November and December, a figure just slightly up on the previous quarter’s report of 670.

The authors said the drop was no surprise and argued that it came with the silver lining that homes were becoming more affordable for first-time buyers.

The sharp decline confirms the downward trend of recent years.

But the drop followed a period when Northern Ireland house prices rocketed over a very short period of time.

The survey, billed as the most broadly-based of those undertaken in Northern Ireland, covers approximately 120 estate agents and records all open-market transactions.

It showed the overall average price of a house in the final quarter of 2008 was £168,185 – a drop of 16.6% on the third quarter.

Some property types saw greater falls than others.

The sharpest drop was in detached bungalows, down almost 35%over the year to an average of £218,216.

Terraced or town houses fell by 28% to an average of £134,905.

In Belfast the average price of housing at £178,399 showed a 20.9% annual decline, indicating that it did better than the overall Northern Ireland market.

Former Anglo Irish Bank chairman Seán FitzPatrick was given tens of millions worth of sterling and dollar loans, it has emerged.

Irish Nationwide gave tens of millions worth of sterling and dollar loans to Mr FitzPatrick as part of his loan transfers between the two institutions to conceal up to €122 million in borrowings from Anglo Irish.

The Irish Times reports that Irish Nationwide provided Mr FitzPatrick with loans of $56 million and £14 million on 26 September, 2007.

The building society also reportedly loaned the then Anglo Irish chairman $26 million on 27 September, 2006 with an undertaking from Anglo Irish that it would repay the loan if Seán FitzPatrick could not.

The report says that these borrowings form only part of Mr FitzPatrick’s loans from Irish Nationwide in 2007, as Anglo Irish Bank said last month that he had repaid €122 million.

Seán FitzPatrick borrowed from Irish Nationwide over eight years, drawing loans before Anglo Irish’s accounting year-end on 30 September, and repaying them within days with fresh loans from Anglo.

By transferring the loans, the Irish Times says, Mr FitzPatrick hid them from the bank’s auditors and shareholders.

The Financial Regulator and the Office of the Director of Corporate Enforcement are investigating Mr FitzPatrick’s loans.

Speaking on RTÉ Radio’s Morning, Mr Kenny said taxpayers’ money should be carefully employed

Last night, Minister for Finance Brian Lenihan said there was much tougher talking to be done before the Government signs off on the plan.

He said the Government will call the shots and will have a substantial influence.

Minister Lenihan said the Government has a detailed assessment of the banks’ debts but it would observe due diligence before investing in the banks, as any investor would.

Meanwhile, a group of teachers from all three teaching unions, ASTI, INTO and TUI, are to stage a picket at Anglo Irish bank, on St Stephen’s Green this afternoon.

Teachers United says the protest is to highlight the underfunding of the education system, while the banks are being bailed out.

In its latest economic forecast, the Central Bank says the contraction will lead to significant job losses with 100,000 fewer people working by the end of the year.

The bank says unpalatable short-term measures are needed if the economy is to stabilise in 2010.

In one of the most negative outlooks published so far, the bank says the contraction in the economy this year will more than cancel out growth the economy enjoyed in the boom year of 2007.

In the housing market, blamed for many of the ills, the Central Bank says completions could fall to as low as 22,000 units this year compared to 52,000 last year, despite their being more affordable.

Last year saw the first drop in employment in many years. The trend is set to accelerate and assuming some emigration, unemployment is likely to average 9.4% of the labour force this year.

However, it believes Ireland has the potential to grow strongly again if productivity can be improved but the potential is not a given and the Central Bank says unpalatable measures are needed.

The bank says the largest item of government expenditure, the public sector pay bill, is ‘beyond the scope of current resources’.

It says the public sector needs to use its purchasing power to drive hard bargains with the services sector.

The central bank suggests reducing tax avoidance schemes and imposing user charges for public services.

It describes Ireland as unusual in not applying an annual residential property tax.

The Government has announced support for a recapitalisation programme of up to €10 billion for credit institutions.

In a statement issued this evening, it said its objective was to ensure the long-term sustainability of the banking sector in Ireland.

The Government said it would support the programme alongside existing shareholders and private investors, and would underpin its contribution through the availability of credit to individuals and businesses in the real economy.

After a day of meetings, Minister for Finance Brian Lenihan confirmed that money from the National Pensions Reserve Fund will be used in the recapitalisation programme.

State investment will take the form of preference and/or ordinary shares in the institutions receiving funds.

Mr Lenihan said State investment would be assessed on a case-by-case basis and all the institutions were being asked to submit their proposals by early next month.

A spokesperson for AIB said the bank’s board would discuss the Government announcement when it meets later this week.