New data from trade body UK Finance shows a broadly improved position in terms of mortgage arrears.
The number of homeowner mortgages in arrears in Q1 2026 was 2% lower than the previous quarter. Meanwhile the number of buy-to-let (BTL) mortgages in arrears was 6% lower than the previous quarter.
The overall proportion of mortgages in arrears remains low, at 0.91 per cent of homeowner mortgages and 0.47 per cent of BTL mortgages.
The number of properties taken into possession increased compared with the previous quarter, but are flat year-on-year and overall numbers remain significantly lower than long-term averages.
In more detail, UK Finance says that in the first quarter of 2026, there were 79,110 homeowner mortgages in arrears of 2.5% or more of the outstanding balance. This was a two per cent decrease compared with Q4 2025.
The number of BTL mortgages in arrears also fell, down 6% compared with the previous quarter and down a substantial 24% year-on-year, to 8,960.
The overall proportion of mortgages in arrears remains low, at 0.91% of homeowner mortgages and 0.47% of BTL mortgages.
For comparison purposes, the number of homeowner and BTL mortgages in arrears in Q2 2009, the peak in arrears numbers during the global financial crisis, was 216,400.
Possession numbers increased slightly in Q1 2026 compared to the previous quarter, but remain low compared to historic norms.
A total of 1,250 homeowner mortgaged properties were taken into possession in Q1 2026, which was 38 (or 3%) more than in the previous quarter.
Some 810 BTL mortgaged properties were taken into possession, 5% greater than in the previous quarter and flat year-on-year.
Even so, overall, possessions remain significantly below long-term averages.
UK Finance says possessions currently taking place predominantly relate to older mortgages, with more than two-thirds of possessions relating to mortgages arranged at least a decade ago.
David Miller, divisional director at Spicerhaart Corporate Sales, says in response to the figures: “The good work of lenders is on show once again as we see arrears cases fall across all bands in Q1. While this is clearly great news, we do have to address the elephant in the room.
“The landscape is changing rapidly with the ongoing Iran conflict derailing the future path of interest rates and inflation.
“In recent months, we have seen the number of instructions coming to us has increased – particularly for support with assisted voluntary sales.
“With no signs of an end to this conflict and inflation likely to climb further, lenders must keep that laser focus on forbearance, arrears management and proactive intervention and support.”
