Data from the Central Bank show 421 homeowners either volunteered or were forced to hand over the keys to their property in the third quarter.

A total of 141 owner-occupier properties were repossessed by court order and the remaining 280 were voluntarily surrendered or abandoned.

A number of bodies, including the Economic and Social Research Institute, the Central Bank and, most recently, the European Central Bank (ECB), have highlighted the relatively low level of repossessions in Ireland.

Mario Draghi, president of the ECB, said last month that the inability of Irish banks to repossess homes on the scale in other European countries was one of the main reasons why standard variable rates were higher in Ireland.

There were 1,678 properties in banks’ possession at the beginning of the third quarter.

The Central Bank figures also showed that 43 per cent of owner-occupier mortgage holders in arrears were at least two years behind on their repayments.

A total of 79,562 family home mortgages were in arrears at the end of September, of which 34,551 were in the most serious category of arrears of 720 days or more.

There was a marginal decrease in the number of borrowers in arrears of more than 720 days with 429 mortgage accounts moving out of this classification in the third quarter; a decline of 2.3 per cent on the previous quarter.

The overall number of homeowners in arrears also declined, by 2,530, but 56,350 remained in arrears of more than 90 days. This represented a quarterly decline of 2.1 per cent of mortgage loans in arrears of three months or more.

More than 10,000 owner-occupier mortgages were held by unregulated loan owners, commonly referred to as vulture funds.

Bernard Sheridan, director of consumer protection at the Central Bank, has said that the regulator was particularly concerned about this cohort of loan owners.

While there was no evidence of vulture funds raising interest rates on the thousands of loans they have acquired from traditional lenders, he has warned that the Central Bank would be powerless to prevent any such moves.

Michael McGrath, the Fianna Fail finance spokesman, welcomed the overall reduction in mortgage arrears but expressed concern over the high level of arrears among borrowers whose loans were owned by vulture funds.

“One of the most alarming aspects in today’s figures lies in the arrears rate among mortgages held by subprime lenders and mortgage funds. The typical restructure options used by banks are not being used to the same effect among [these loans owners] and you would have to fear for mortgage holders in this situation.

“Vulture funds now own about 10,000 family home mortgages. Of the total mortgage book of €1.9 billion, mortgages worth some €1.3 billion are in arrears. This underlines the scale of this problem.

“These funds are generally not directly regulated by the Central Bank. The borrower’s contact is with an intermediary who does not make the final decision regarding a restructure proposal or whether to commence repossession proceedings.”

So-called non-bank entities held 45,678 mortgage accounts for primary-dwelling homes and buy-to-let properties combined. About 70 per cent were held by regulated companies.

The number of owner-occupier loans in arrears of more than two years was significantly higher among non-regulated companies, reflecting the poorer quality loan books they have acquired.

About 38 per cent of the owner-occupier loans owned by vulture funds were in arrears compared with 19 per cent of the home loans held by regulated credit retail companies.

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Buying a car on finance could wipe tens of thousands off how much you can borrow on a mortgage, experts have warned. The number of people paying for a vehicle with a loan has ballooned in the past few years. A record 2.7 million new cars were sold in 2016 and more than 85 per cent of private car registrations were bought through some kind of finance deal, according to the Finance & Leasing Association.

Mortgage regulations dictate that lenders have to factor in the cost of car loan repayments when deciding on offers, and even monthly vehicle repayments of £200 can lead to you being offered £40,000 less on a mortgage.

“I am not sure people realise that the loans can make such a difference when they are factored into the affordability calculations, especially when they have other unsecured debts,” says Aaron Strutt, the product director at Trinity Financial, a mortgage broker.

He cites the example of one couple who had a combined salary of £75,000, two children, and a car loan, which cost £280 a month. Without the vehicle repayments they would have been offered a mortgage of £287,695, even after taking their credit card repayments and the cost of childcare into account. Yet their car commitment took a heavy toll and they were offered only £246,560. “It is also not unusual for people to have two cars on finance,” says Mr Strutt.

Another client earned £31,000, but was paying £330 a month for his car. It meant he could borrow only £116,800 on a mortgage, compared with the £154,000 he would have been offered without the debt.

As well as hire-purchase deals, new cars are often bought through personal loans. Personal loans mean that you get the money upfront and can buy the car outright from the dealer, and then pay off the loan over a period of one to five years. The downside is you need to have a strong credit rating to be eligible for the best rates.

The most competitive rate on a £5,000 unsecured loan paid back over three years is 3.7 per cent, from Hitachi Personal Finance. It would mean paying back £5,285.53 over the course of the loan. A rate of 3.8 per cent on the same £5,000 loan is being offered by three providers, Ikano Bank, M&S Bank and Cahoot. It would mean paying back just over £5,293.

Cheaper rates are available on larger loans. The best rate on a loan of between £7,500 and £15,000 is about 3 per cent, from lenders including M&S Bank, Cahoot, Clydesdale and Yorkshire, and Zopa.

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Interest-only mortgages, usually available to wealthy homeowners, are about to become an option for everyone for the first time since the financial crisis.

These loans all but disappeared from the mortgage market after the credit crunch, when they were considered part of the irresponsible lending that led to the financial crisis.

Since then they have made a gradual reappearance, but were limited to people with high incomes and deposits who could demonstrate a clear method of paying back the loan other than having to sell the property.

This week, however, Santander announced that it will be withdrawing its £50,000 salary requirement (£70,000 for joint incomes) for an interest-only mortgage within the next two to three weeks. The bank is also to increase the age limit for borrowers from 65 to 70. However, it is likely to require a 25 per cent deposit, and equity of at least £150,000 in the property if it is used as the repayment vehicle.

“Interest-only may not be right for everyone, but appetite has grown in recent years,” says Miguel Sard, the managing director of mortgages for Santander UK. The monthly savings from paying off only the interest, but not the capital, can be considerable. For example, you can save £20,000 a year in repayments on a £500,000 mortgage at a rate of 1.84 per cent.

It is a move that has shocked other lenders who may have to follow suit, says Aaron Strutt, of the Trinity Financial Group. “Up until recently lenders have been constantly lowering their rates to increase business. We’ve reached a point where rates can’t go any lower, so they have to ease their criteria.”

Lenders are also feeling the pinch because the number of buy-to-let loans has fallen and the housing market is slowing in some areas. Santander’s latest management quarterly update showed a fall of £1.2 billion in net lending over the previous year, from £2.7 billion to £1.5 billion.

According to the Council of Mortgage Lenders (CML), only 1 per cent of people applying for a new mortgage managed to obtain an interest-only loan. This figure rose to 4 per cent for people who remortgaged.

Last year Halifax, the UK’s largest and most cautious bank, accepted the sale of a mortgaged property as a way of paying off an interest-only loan. It was a massive change of heart from a lender that previously required borrowers to have a pension pot of £1 million as a repayment vehicle.

The CML says the number of interest-only loans fell from 2.5 million in 2012 to 1.7 million in 2015. Some people who managed to get an interest-only mortgage in 2012 are struggling to remortgage to another interest-only loan, so Santander’s announcement may well come to their rescue.

Alan Smith, is in this situation. He is worried that he will have to sell his house in Littlehampton, West Sussex, where he has lived with his wife, both 73, for the past 25 years. “We remortgaged some years ago and have an interest-only mortgage that expires next year,” says Mr Smith, who is a surveyor. Their house is worth £300,000, with £193,000 outstanding. The only way we can make repayments is to sell the house, but we don’t want to and are desperate to find a way of staying. We have already asked the lender if we can extend the mortgage, but it wasn’t able to help. Ideally we need somebody to buy the property and to allow us to rent if from them.”

Interest-only best buys
Santander
0.99 per cent fixed for 18 months with 40 per cent deposit and £1,499 fee. Minimum £50,000 income or £70,000 joint. Equity of £150,000.

HSBC
1.44 per cent fixed for three years with a 40 per cent deposit and £999 fee. One applicant needs to earn £100,000 and a valid repayment vehicle is required.

HSBC
1.79 per cent five-year fixed with a 40 per cent deposit and £999 fee. One salary of £100,000 and a valid repayment vehicle is required.

TSB
1.19 per cent two-year tracker with 40 per cent deposit and £995 fee. No minimum income but there are strict criteria for the repayment vehicle.

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