UK mortgage arrears fall for eighth consecutive quarter

UK mortgage arrears have declined for the eighth consecutive quarter, according to the latest data from UK Finance for Q2 2026. Total homeowner mortgages in arrears of 2.5% or more of the outstanding balance fell by 1% to 77,940, representing 0.89% of all outstanding homeowner mortgages.

Buy-to-let (BTL) mortgage arrears also saw a reduction, with 8,390 mortgages in arrears of 2.5% or more, a 6% decrease from the previous quarter. Specifically, BTL arrears in the lightest band (2.5% to 5%) dropped by 7%.

Property possessions have decreased significantly. Homeowner mortgage possessions fell by 8% to 1,150, which is 14% lower than the previous year and well below the long-term average. BTL property possessions dropped by 22% to 630. Most current possessions involve older mortgages arranged at least a decade ago.

Industry experts noted that while the trend is encouraging, financial pressures such as inflation and higher borrowing costs remain challenges for many households. Some analysts attributed the downward trend to the Bank of England’s decision to hold the base rate at 3.75%.