Mortgages in arrears fall for the tenth consecutive quarter

Latest Mortgage arrears and possessions data from UK Finance for Quarter 3 2026 has shown that the number of homeowner mortgages in arrears fell for the tenth consecutive quarter in Q3 2026 to 76,080, down 10 per cent on the year and two per cent on the quarter.

There were 76,080 homeowner mortgages in arrears of 2.5 per cent or more of the outstanding balance in the third quarter of 2026, 2 per cent fewer than in the previous quarter. Within the total, there were 26,560 homeowner mortgages in the lightest arrears band (representing between 2.5 and 5 per cent of the outstanding balance). This was 2 per cent fewer than in the previous quarter.

There were 8,170 buy-to-let mortgages in arrears of 2.5 per cent or more of the outstanding balance in the third quarter of 2026, 3 per cent fewer than in the previous quarter. Within the total, there were 3,090 buy-to-let mortgages in the lightest arrears band (representing between 2.5 and 5 per cent of the outstanding balance). This was 4 per cent greater than in the previous quarter.

Although possession numbers rose slightly compared with Q2, from 1,780 to 1,840, this was 20 per cent 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 per cent year-on-year and unchanged on the quarter, remaining at their lowest level since Q4 2024. Whilst buy-to-let possessions increased 10 per cent on the quarter to 690, they remained 23 per cent 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.”

David Miller, divisional director at Spicerhaart Corporate Sales, said “Despite the impact of the Middle East conflict, today’s data shows that those shocks are not yet filtering through to customers and their ability to manage their commitments. This has meant that the positive trend on arrears can continue, supported by the tremendous work of lenders to prioritise proactive engagement and good forbearance where necessary.

“This fantastic news is combined with repossession levels remaining static, which demonstrates that this is still the last resort for lenders. Where both arrears and repossessions will continue to be tested is through mortgage maturity, as borrowers move off more favourable deals and onto higher rates, as well as those in leasehold properties, which continues to be a real challenge for lenders to manage and make up more than half of the properties we manage on their behalf. In the final stretch of the year, this must remain a real focus for lenders, staying close to their customers and to their mortgage book, understanding where values sit and where there are potential risks to have the ability to intervene early if a client comes into difficulty.”

Melanie Spencer, Growth Director at Target Group, said “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.

“As a result, lenders must maintain a clear understanding of their customers’ circumstances and ensure they have the servicing capability to respond when those circumstances change. We’re seeing more lenders recognise the importance of working with specialist outsourced partners, combining experienced people, technology and regulatory expertise to support borrowers through changing circumstances and achieve better customer outcomes.”