The number of homeowner and buy-to-let mortgages in arrears declined during the second quarter of 2026, according to the latest UK Finance data.
There were 77,940 homeowner mortgages with arrears equivalent to at least 2.5% of the outstanding balance, representing a quarterly reduction of 1%.
Buy-to-let mortgages in the same arrears category fell by 6% to 8,390.
Arrears accounted for 0.89% of all outstanding homeowner mortgages and 0.44% of buy-to-let loans during the quarter.
EARLY-STAGE ARREARS DECLINE
Within the lightest arrears band, covering missed payments equal to between 2.5% and 5% of the outstanding balance, there were 27,100 homeowner mortgages — 1% fewer than during the previous quarter.
The number of buy-to-let mortgages in this category decreased by 7% to 2,980.
UK Finance says lenders continue to offer tailored support to borrowers facing payment difficulties and stresses that contacting a lender to discuss available help will not affect a customer’s credit score.
POSSESSIONS FALL YEAR-ON-YEAR
A total of 1,150 homeowner mortgaged properties were taken into possession during the second quarter, down 8% from the previous three months and 14% compared with a year earlier.
Buy-to-let possessions fell more sharply, with 630 properties taken into possession — 22% fewer quarter-on-quarter and 20% below the corresponding period of 2025.
Possession levels remain significantly below their long-term average. More than two-thirds of current cases relate to mortgages arranged at least 10 years ago.
UK Finance says lenders will seek to keep customers in their homes wherever possible, with possession used only after other available options have been explored.
LENDERS READY TO PROVIDE SUPPORT
James Tatch (main picture, inset), Head of Analytics at UK Finance, says: “The number of mortgages in arrears are falling for both residential and buy-to-let mortgages – and possessions are also down year-on-year for the first time since late 2003, and remain significantly below the long-term historic average.
“If you are concerned about meeting repayments, the first port of call is always to speak to your lender, who stand ready to offer tailored help available.”
FINANCIAL PRESSURES
Ian Harris, NAEA Propertymark President, says: “Whilst these figures are encouraging, it is important not to lose sight of the financial pressures that continue to affect homeowners and landlords. The reduction in mortgage arrears and repossessions is welcome, but affordability remains a challenge for many across the housing market.
“Early engagement is key to helping those facing financial difficulty, providing an opportunity to explore the support and options available before circumstances become more difficult to resolve. This is particularly important for landlords, where financial pressures can also have wider implications for the availability of homes in the private rented sector.
“With the majority of possessions relating to older mortgages, continued collaboration between lenders, agents and policymakers will be important in supporting those at risk and maintaining confidence and stability across the housing market.”
“Borrowers have shown that they are managing their commitments.”
And David Miller, divisional director at Spicerhaart Corporate Sales, says: “Quarter after quarter, the tremendous, proactive work of lenders continues to shine through.
“Even where we’ve seen elevated interest rates in recent years, borrowers have shown that they are managing their commitments well.
“Where this will be tested is those existing borrowers coming to end of more favourable deals and moving onto much higher rates. Lenders need to be vigilant and stand ready to provide support where it is needed – for those get ready to refinance and as the implications of the Middle East conflict potentially start to bite.
“It’s fantastic to see the number of possessions decline in the quarter. Given what our data is telling us, I would confidently predict that the majority of these cases are leasehold properties – in particular, leasehold flats.
“They make up over half of the properties we current manage as soaring service charges and ground rents leave many borrowers with limited options and continue to force the hand of lenders.
“Otherwise as the data shows, possession does remain that last resort, as many lenders look to explore assisted voluntary sales to deliver a positive outcome for all sides.
