In Q3 2025, there were 84,100 homeowner mortgages in arrears of 2.5% or more of the outstanding balance, a 4% decrease compared with Q2, the latest UK Finance Figures show.
Within this total, 28,940 homeowner mortgages were in the lightest arrears band (representing between 2.5 and 5% of the outstanding balance), 3% fewer than in the previous quarter.
The number of buy-to-let mortgages in arrears also fell, down 8% compared with the previous quarter, while those in the lightest arrears band is down by 9%.
UK Finance says the overall proportion of mortgages in arrears remains low, at 0.97% of homeowner mortgages and 0.54% of buy-to-let mortgages.
Possessions
Although possessions numbers increased, UK Finance says they remain low compared to historic norms. A total of 1,390 homeowner mortgaged properties were taken into possession in Q3, 4% greater than in the previous quarter.
In addition, 900 buy-to-let properties were taken into possession, 14% greater than in the previous quarter.
Even with these increases, possessions remain significantly below long-term averages, with current levels broadly in line with those seen in the five years before the pandemic.
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.
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."
Mary-Lou Press, president of NAEA Propertymark, commented: “Falls in both homeowner and buy-to-let mortgage arrears are a welcome sign that stability is returning to the housing market after a challenging period for many borrowers. It’s particularly encouraging to see that arrears remain well below long-term averages, reflecting the effectiveness of lender support and the resilience of households.
“However, the slight rise in possessions highlights that pressures still exist, particularly for those on older mortgage products who have been struggling for some time."
David Miller, divisional director at Spicerhaart Corporate Sales, added: “Against the current backdrop, we should be really encouraged to see yet another fall in arrears cases across both residential and buy-to-let. 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.”
