Homeowner and buy-to-let arrears continue to drop, with possessions edging higher
Mortgage arrears fell in the first quarter of 2026, according to data published by UK Finance, with both homeowner and buy-to-let (BTL) segments recording declines.
Homeowner mortgages in arrears of 2.5% or more of the outstanding balance stood at 79,110 in Q1 2026, a 2% reduction on Q4 2025. BTL arrears fell more sharply, dropping 6% quarter-on-quarter and 24% year-on-year to 8,960.
The proportion of all mortgages in arrears remains low, at 0.9% for homeowner mortgages and 0.47% for BTL. By comparison, arrears peaked at 216,400 during the global financial crisis in Q2 2009.
Possession volumes edged higher in Q1 2026 but remain well below historical averages. A total of 1,250 homeowner mortgaged properties were taken into possession during the quarter, 38 more than in Q4 2025. BTL possessions rose 5% quarter-on-quarter to 810, though the figure was flat year-on-year.
UK Finance noted that more than two-thirds of current possessions relate to mortgages arranged at least 10 years ago, and that repossession is pursued only as a last resort after all other options have been exhausted.
"The number of mortgages in arrears continues to fall for both residential and buy-to-let mortgages," said James Tatch (pictured right), head of analytics at UK Finance. "While possessions are up very slightly on the previous quarter, they remain low by historic standards."
Mary-Lou Press, president of industry body NAEA Propertymark, however, pointed out that while the decline in mortgage arrears in Q1 relative to the previous quarter was a positive development, it remained important to acknowledge future affordability constraints, particularly in light of current global unrest.
"The current rate of inflation remains a key concern, and the impact this may have on the base rate remains to fully play out yet.
“Should homeowners find themselves in a position where they are worried about repayments, they should proactively speak with their lender at the very first opportunity, as they have a duty to help where possible and will also be keen to do so.”
Tatch added: "Lenders stand ready to support customers who may be worried about meeting their repayments. We would always recommend customers contact their lender as soon as possible to discuss the tailored help available."
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
