The top-rated loans in a €1.5 billion pool of Irish Nationwide residential mortgages sold to investors through the building society’s Armoin covered bond may be downgraded by credit rating agency Fitch.

Concern had been expressed that arrears were spread across old and new mortgages.

Loans more than three months in arrears were 5.55 per cent of the pool, well above initial expectations, the agency said, as it placed the class A notes rated AAA within the pool on negative watch. The covenant on the bond is 6 per cent.