New figures from the Fitch rating agency shows that for the first time since 2005, Irish mortgages in arrears by more than three months posted a "sustained decline" to 17.7% in the second quarter of 2015.

This compares to a peak 19.3% in the third quarter of last year.

In its Mortgage Market Index report for Ireland, Fitch said the fall is due to "ongoing servicing activities" by the banks which are aimed at resolving long-term arrears cases. 

The improving domestic economy was also for a factor in the slowing number of short term arrears.  

However, the rating agency also pointed out that Central Bank figures show that the portion of loans in arrears by more than 720 days continues to rise. It said this implied that more loan renegotiations are yet to take place.

Earlier this year, the Central Bank announced new limits on new mortgages. Fitch noted that these were likely to lower credit growth but should have a limited impact on home price recovery.

It also said that the start of the European Central Bank's quantitative easing programme in January triggered a decrease in the three-month Euribor, which lead to a fall in mortgage rates.

"Rates are expected to decline further and should remain low in the coming year. This is likely to support home price recovery, partially offsetting the impact of the new mortgage lending regulation," Fitch said.