The number of homeowner mortgages in arrears fell for the tenth consecutive quarter in Q3 to 76,080, down 10% on the year and 2% on the quarter, the latest UK Finance data shows.
The number of buy-to-let arrears was also down 22% year-on-year and 3% on the quarter.
Whilst the number of buy-to-let mortgages in the lightest arrears band increased modestly compared with the previous quarter, it remained 18% lower than a year earlier. Aside from this, numbers of arrears in all other bands fell in both the homeowner and buy-to-let sectors.
Mortgages in arrears made up 0.87% of all homeowner mortgages and 0.43% of all buy-to-let mortgages in the third quarter of 2026.
Possessions
Although possession numbers rose slightly compared with Q2, from 1,780 to 1,840 (3%), this was 20% down on the same quarter in 2025.
This was the second consecutive year-on-year fall, with numbers significantly lower than historical peaks.
Within the total, homeowner possessions were down 17% year-on-year and unchanged on the quarter, remaining at their lowest level since Q4 2024.
Whilst buy-to-let possessions increased 10% on the quarter to 690, they remained 23% below a year earlier.
James Tatch, head of analytics at UK Finance, said: “The latest arrears and possessions data shows that borrowers are continuing to manage their mortgage payments despite rising cost pressures.
“With homeowner arrears falling for a tenth consecutive quarter, and possessions well below historic highs, the overall picture is one of a resilient mortgage market, with the vast majority of customers continuing to make their repayments on time.
“Despite the positive news on falling arrears, we know customers are currently dealing with a rising cost of living, as well as the impact the war in the Middle East is having on interest rates.
“Mortgage lenders remain committed to supporting customers who are facing difficulties. Anyone worried about keeping up with their repayments should contact their lender as soon as possible to discuss what tailored support is available to them.”
Melanie Spencer, growth director at Target Group, commented: “The continued fall in mortgage arrears, extending a downward trend of more than two years, is encouraging and suggests that despite very clear headwinds, many borrowers are continuing to keep up with their mortgage payments. Importantly, it also reflects the focus lenders have kept on early intervention and proactive customer support to help prevent financial difficulties from escalating.
“As we’ve seen mortgage rates do not move in lockstep with the base rate. The Bank of England increased the base rate last week for the first time in more than three years, although Andrew Bailey was clear that this should not be viewed as the first of many hikes. At the same time though, he couldn’t say for sure it would be the last either. Borrowers refinancing, adjusting to changes in household expenditure and navigating wider economic difficulties will therefore continue to face different affordability challenges."
Richard Pike, chief sales and marketing officer at Phoebus Software, added: “Despite the growing pressures on household finances over recent months, UK borrowers remain resilient in the face of rising costs, with mortgage arrears falling for a ninth consecutive quarter.
“The continued improvement in arrears helps to reinforce confidence in the UK mortgage sector and support lenders' appetite to lend. However, there is a risk that improving arrears figures mask some of the underlying pressures facing households. The impact of higher borrowing costs and inflation can take time to feed through, particularly for borrowers who have yet to refinance onto higher rates.
“Combine this with real household disposable income expected to come under further pressure next year, 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.
“Maintaining this progress will depend on lenders having a clear understanding of the pressures facing their customers, rather than relying solely on arrears as an indicator of financial difficulty. Changes in income, household circumstances or mortgage affordability can all create vulnerabilities before they show up in payment data. Having the right information and servicing capabilities to understand these changes will help lenders tailor their approach, provide appropriate support and prevent temporary financial difficulties from becoming longer-term problems.”
