Thousands of Irish homeowners are set to be affected after Ulster Bank announced its decision to sell off a mortgage portfolio worth around €900m.

The bank said 90% of the loans included in the sale relate to private and family homes.

It means around 3,200 Irish homeowners - holding mortgages worth €810m - are facing the prospect of having their loans sold to a separate fund.

Around 400 of the loans are buy-to-let mortgages.

In a statement, the bank said all the homeowners were “given every opportunity to agree a sustainable solution and to remain in a home that they can afford” before the loans were put up for sale.

It said it is obliged to reduce the level of non-performing loans on its balance sheet.

It said it views the mortgages as “not sustainable” and insisted that continuing to work with the homeowners will “not bring them back to a performing position.”

Newstalk Business Correspondent Gavin Mc Loughlin said it is one of the biggest sales of its kind to date.

“There are around 3,200 Family home mortgages included in this,” he said.

“€900m in total was lent out on these loans that Ulster Banks is selling. It is one of the biggest sales of non-performing loans that we have seen to date.”

Ulster Banks said four-in-ten of the private home owners included in the sale first fell into arrears over seven years ago. None of these are currently in a payment plan with the bank.

It said 85% of the buy-to-let mortgages have been in arrears for over 12 months.

The bank said the private homeowners are, on average, €33,000 behind on their mortgages – a figure that rises to €36,000 for the buy-to-let loans.

The family homes have spent an average of 58 months in arrears while the buy-to-let loans have been in arrears for an average of 41 months.