In the buy-to-let sector, 8,390 mortgages were in arrears of 2.5% or more, down 6% quarter-on-quarter. The lightest arrears band accounted for 2,980 BTL mortgages, a 7% reduction on the previous quarter. BTL arrears represented 0.44% of all outstanding buy-to-let mortgages.
The latest UK Finance figures also showed a decline in possession volumes in Q2. A total of 1,150 homeowner mortgaged properties were taken into possession during the quarter, 8% fewer than in Q1 2026 and 14% fewer than in the same period a year earlier.
In the BTL segment, 630 properties were taken into possession, down 22% quarter-on-quarter and 20% year-on-year. UK Finance noted that overall possession numbers remain significantly below long-term historical averages.
“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 2023, and remain significantly below the long-term historic average,” said James Tatch (pictured right), head of analytics at UK Finance.
More than two-thirds of current possessions relate to mortgages arranged at least a decade ago. The trade body said repossession in such cases can allow borrowers who have been struggling for an extended period to exit their mortgage while retaining equity in their property.