Nearly 32,000 mortgage accounts were more than 720 days behind on payments and just under 40,000 mortgages were in arrears of over 360 days at the end of September, new figures from the Central Bank show.
The number of accounts in arrears of more than 720 days fell by 545 (1.7%) between the second and third quarters of 2017.
Overall, the number of mortgages in arrears fell for the 17th consecutive quarter in the three months to September, however, 10% of all mortgage accounts are still behind on payments.
There was a 1.7% fall in the number of accounts in arrears between the second and third quarters of 2017, leaving a total of 72,489 accounts behind on payments at the end of September.
More than 50,000 of these accounts are in arrears of more than 90 days, a fall of 2.1% on the previous quarter.
The figures also show nearly 120,000 mortgages on people's primary homes that had been restructured by the end of September, with the vast majority (87%) of these accounts meeting the terms of the restructured arrangements.
Between July and September, legal proceedings were issued against more than 1,000 homeowners in relation to their arrears, with courts granting just over 400 repossession orders or an order to sell the property.
Bad loans hampering banks' ability to lower interest rates
Separately, a technical paper has been published by Central Bank economists David Byrne and Robert Kelly examining the quality of bank credit in the euro area and its effect on the efficient pass-through of monetary policy actions.
The research found distressed loan books hamper banks' abilities to supply credit and keep loan prices low in the light of ECB interest rates.
Specifically, non-performing loans played a significant role in the differences in the rate of pass-through of interest rate cuts in the euro area post-crisis.
The paper also says bigger banks, more liquid banks and banks with greater deposit-to-liability shares were found to have lower lending rates.
In turn, banks with a high degree of impaired lending were found to have higher interest rates and a one percentage point increase in the bank’s share of impaired loans lowers immediate pass-through by three percentage points.
The paper says this underlines the importance of resolving bad loans in order to lower loan pricing and improve the functioning of credit supply to Europe's heavily bank credit dependent firms.
The paper considers the period 2008 to 2014.
The average interest rate on new mortgages in Ireland in September stood at 3.31%, which was nearly double the equivalent rate across the euro area, which stood at 1.86%.
