Mortgage repossessions rise sharply as arrears fall

Latest data from UK Finance has shown that home repossessions rose sharply in Quarter 3 (Q3) 2025, but mortgage arrears fell.

The analaysis showed that there were 1,390 homeowner repossessions, up 51% annually, and 900 buy-to-let repossessions, with this up 29%. Despite this, levels remain close to pre-pandemic norms and well below long-term averages, with most cases linked to older mortgages.

Arrears dropped to 84,100 homeowner and 10,420 buy-to-let mortgages, reflecting improved stability and lender support. Experts welcome the fall in arrears but warn rising repossessions show ongoing financial pressure, urging borrowers to seek help early.

Within that there were 28,940 homeowner mortgages in the lightest arrears band, representing between 2.5 and 5% of the outstanding balance. This was 3% fewer than in the previous quarter.

There were 10,420 buy-to-let (BTL) mortgages in arrears of 2.5% or more of the outstanding balance in the third quarter of 2025, 8% fewer than in the previous quarter. Within the total, there were 3,750 BTL mortgages in the lightest arrears band, again making up between 2.5 and 5% of the outstanding balance. This was 9% fewer than in the previous quarter.

Mortgages in arrears accounted for 0.97% of all homeowner mortgages outstanding and 0.54% of all BTL mortgages outstanding in the third quarter of 2025.

Repossessions for homeownership mortgaged properties did rise in Q3 2025, by 4% to 1,390. UK Finance said this was “significantly below the long-term average”.

Charles Roe, Director of Mortgages at UK Finance, said “The total number of mortgages in arrears continued to fall in Q3, as they have done since Q1 2024, which is a positive sign. While possessions have risen slightly, they predominantly relate to mortgages arranged more than ten years ago and remain low by historic standards and broadly in line with pre-pandemic levels.

“Lenders remain committed to supporting customers who may be struggling. If you are worried about your mortgage payments, please contact your lender as soon as possible to discuss the tailored help available.”

David Miller, Divisional Director at Spicerhaart Corporate Sales, said “Against the current backdrop, we should be really encouraged to see yet another fall in arrears cases across both residential and BTL. Lenders continue to dispel this myth that repossession is the first port of call. Instead, they put the work in to identify arrears cases early and provide personalised support.

“There’s no question though that lenders will need to keep that laser focus on arrears and good forbearance moving forward, particularly as unemployment jumps to its highest level since 2020. The news around inflation and a potential peak is starting to sound more positive, as is the potential for a base rate cut in December, which will help new borrowers and those set to remortgage. We cannot overlook the Budget though and what impact this could have – particularly if an income tax rise is on the agenda. No matter what, we must stay close to our clients and adopt a proactive approach to understanding value and identifying risk across mortgage books.

“While the data does show an increase in possessions, which is most likely involves those in the highest arrears band, we must note that it is still well below the long-term average. Lenders continue to stay close and implement proactive exit strategies – such as assisted voluntary sale – to ensure all parties receive a positive outcome. This will continue to play a significant role.”