In Q2 2026, 77,940 homeowner mortgages were in arrears of 2.5% or more of the outstanding balance, 1% fewer than the previous quarter, according to the latest arrears and possessions data from UK Finance.
Of those, 27,100 homeowner mortgages were in the lightest arrears band, covering 2.5% to 5% of the balance, also 1% lower than the previous quarter.
There were 8,390 buy-to-let (BTL) mortgages in arrears of 2.5% or more, 6% fewer than the previous quarter. Within this total, 2,980 BTL mortgages were in the lightest arrears band, down 7%.
Homeowner mortgages in arrears made up 0.89% of all outstanding homeowner mortgages, while BTL mortgages in arrears accounted for 0.44% of the total.
A total of 1,150 homeowner mortgaged properties were taken into possession, 8% fewer than the previous quarter and well below the long-term average. A total of 630 BTL mortgaged properties were taken into possession, down 22%.
Richard Pike, chief sales and marketing officer at Phoebus software, said:
“The fact that mortgage arrears have fallen for an eighth consecutive quarter is an encouraging sign of the resilience of UK borrowers, particularly given the economic uncertainty we have faced over recent months.
“However, it would be wrong to interpret another fall as evidence that the pressure on household finances has disappeared.
“Many borrowers are still adjusting to higher mortgage costs than they were used to, while inflation, household bills and a softer labour market continue to create challenges.
“The continued improvement does show that borrowers and lenders have so far managed to navigate these pressures effectively.
“But lenders cannot afford to become complacent. The risk is increasingly concentrated among those households facing a combination of higher borrowing costs and changing personal circumstances.
“That makes early identification and intervention particularly important.
“The ability to spot emerging signs of financial stress and engage with customers before arrears become a serious problem will be crucial to sustaining the positive trend.
“Effective servicing systems can give lenders a much clearer picture of customer circumstances, enabling them to intervene earlier and provide the right support.”
Melanie Spencer, growth director at Target Group, said:
“A further fall in mortgage arrears suggests that despite the financial pressures households have faced in recent years, mortgage borrowers are managing to stay in the black.
“Meanwhile, lenders continue to ensure that any mortgage distress remains contained, highlighting their good work on early intervention and forbearance. While positive, it’s important to view these latest figures against an economic backdrop that remains complex and difficult to predict.”
