UK Finance data for Q1 2026 showed mortgage arrears have fallen for both homeowners and buy-to-let (BTL) borrowers.
The number of homeowner mortgages in arrears was down 2% on the previous quarter, and buy-to-let mortgages in arrears fell by 6%.
Overall, the proportion of mortgages in arrears remains low, at 0.91% for homeowners and 0.47% for BTL.
Possessions increased slightly, but numbers are still much lower than the long-term average.
In Q1 2026, there were 79,110 homeowner mortgages in arrears of 2.5% or more of the outstanding balance.
This was a 2% drop from Q4 2025.
The number of BTL mortgages in arrears fell to 8,960, a decrease of 6% quarter-on-quarter and down 24% year-on-year.
For comparison, during Q2 2009 at the peak of the financial crisis, there were 216,400 mortgages in arrears.
A total of 1,250 homeowner mortgaged properties were taken into possession in Q1 2026, up 3% on the previous quarter, while 810 buy-to-let properties were taken into possession, up 5% quarter-on-quarter and flat year-on-year.
Most possessions relate to older mortgages, with more than two-thirds arranged over a decade ago.
James Tatch, head of analytics at UK Finance, said: “The number of mortgages in arrears continues to fall for both residential and buy-to-let mortgages.
“While possessions are up very slightly on the previous quarter, they remain low by historic standards.
“Lenders stand ready to support customers who may be worried about meeting their repayments.”
Tatch added: “We would always recommend customers contact their lender as soon as possible to discuss the tailored help available.”
REACTION:
Richard Pike, sales and marketing director of Phoebus Software:
“The latest UK Finance data showing arrears continuing to fall suggests that, despite a challenging backdrop, many borrowers are still managing to stay on top of their mortgage commitments.
“This resilience comes even as the UK economy has remained sluggish in early 2026, with low growth and ongoing global pressures – particularly higher energy costs and persistent inflation – continuing to weigh on household finances.
“Lower mortgage rates compared to peak levels in 2024, alongside some stabilisation in inflation, have provided a degree of relief, particularly for borrowers on variable and tracker mortgages.
“However, the picture is far from risk-free. Borrowers coming off ultra-low fixed-rate deals are still facing a significant jump in monthly payments, and labour market pressures are beginning to build.
“There is a note of caution as repossessions have risen slightly, underlining the importance of timely intervention to manage early signs of stress.
“The figure, however, remains well below the long-term average. Lenders should not become complacent though.
“The environment remains fragile, and early intervention is key. Having robust servicing systems in place that can identify emerging stress and support customers quickly will be critical to maintaining this positive trend.”
David Miller, divisional director at Spicerhaart Corporate Sales:
“The good work of lenders is on show once again as we see arrears cases fall across all bands in Q1. While this is clearly great news, we do have to address the elephant in the room.
“The landscape is changing rapidly with the ongoing Iran conflict derailing the future path of interest rates and inflation.
“In recent months, we have seen the number of instructions coming to us has increased – particularly for support with assisted voluntary sales.
“With no signs of an end to this conflict and inflation likely to climb further, lenders must keep that laser focus on forbearance, arrears management and proactive intervention and support.
“We were pleased to see leasehold reform outlined in the King’s Speech this week and it can’t come soon enough – especially as leasehold properties now make up 54% of the properties we manage for clients.
“Leasehold remains a primary driver behind why properties are coming into possession – whether it’s surging service charges, doubling ground rent or increasing difficulties with management companies.
“This is eroding demand and interest, as well as significantly affecting resale values. It’s an area where urgent action from the Government is needed, not further delays caused by yet another Prime Minister merry-go-round.
“Given the current complexities, we are seeing more lenders looking to outsource to trusted partners with real expertise in asset management – helping them to understand the value and any potential risk within their mortgage book, act early and ensure good outcomes for borrowers.
“On the ground, it is great to see lenders continue to work proactively and in the best interests of their customers.”