It's reported this morning that AIB has reached a deal with a family which will write-off more than a third of their mortgage debt - and allow them to stay in their home.

According to the Irish Independent, 150-thousand euro was written-off as part of the agreement - which is thought to be the biggest of its kind so far in Ireland.

 Last November, AIB entered a partnership with the Irish Mortgage Holders Association to work on a number of write-down deals involving the bank's customers.

This latest arrangement involves a married couple in Greater Dublin - who have two children - and a mortgage of 400-thousand euro which had become unmanageable, with arrears of 30-thousand euro.

Under the terms of the deal, the bank has written off 150-thousand euro of the debt - and the family will continue to pay capital and interest on around 200-thousand euro.

Another 40-thousand will be 'parked' with no repayments or interest and the family WILL be allowed to stay in their home.

It's believed the deal is the largest of the 250 residential write-offs at the bank to date - and could give hope to the 96-thousand mortgage-holders in arrears of three months and over.