UK Finance has released its latest mortgage arrears and possessions data for Q2 2026, which highlighted continuing lender support for customers facing financial difficulty. There were 77,940 homeowner mortgages in arrears of 2.5% or more of the outstanding balance in the second quarter of 2026, which was 1% fewer than in the previous quarter.
The quarterly improvement was much greater for buy-to-let mortgages where there were 8,390 buy-to-let mortgages in arrears of 2.5% or more of the outstanding balance in the second quarter of 2026, which was 6% fewer than in the previous quarter.
Possession numbers decreased in Q2 2026 compared to the previous quarter and are significantly below the long-term average. A total of 1,150 homeowner mortgaged properties were taken into possession in Q2 2026, 8% less than in the previous quarter and 14% less than one year previously.
Again, the improvement was greater for buy-to-let, with 630 buy-to-let mortgaged properties taken into possession, 22% fewer than in the previous quarter and 20% less than one year previously. Overall, possessions remain significantly below long-term averages.
James Tatch, head of analytics at UK Finance, said: “The number of mortgages in arrears are falling for both residential and buy-to-let mortgages – and possessions are also down year-on-year for the first time since late 2023 and remain significantly below the long-term historic average. If you are concerned about meeting repayments, the first port of call is always to speak to your lender, who stand ready to offer tailored help available.”
For those facing financial difficulty, early engagement with lenders is important in exploring the support and options available before circumstances become more difficult to resolve. This is particularly important for landlords, where financial pressures can also have wider implications for the availability of homes in the private rented sector.
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Ian Harris, NAEA Propertymark President, commented: “Whilst these figures are encouraging, it is important not to lose sight of the financial pressures that continue to affect homeowners and landlords. The reduction in mortgage arrears and repossessions is welcome, but affordability remains a challenge for many across the housing market.
David Miller, divisional director at Spicerhaart corporate sales, said: “Quarter after quarter, the proactive work of lenders continues to shine through. Even where interest rates have risen in recent years, borrowers have shown that they are managing their commitments well. Where this will be tested is those existing borrowers coming to the end of more favourable deals and moving onto much higher rates.
Richard Pike, chief sales and marketing officer at Phoebus software, said: “The fact that mortgage arrears have fallen for an eighth consecutive quarter is an encouraging sign of the resilience of UK borrowers, particularly given the economic uncertainty we have faced over recent months. However, it would be wrong to interpret another fall as evidence that the pressure on household finances has disappeared.
As the economic situation continues to unfold, lenders and policymakers will need to remain vigilant and adapt to the changing needs of borrowers. By providing tailored support and exploring options for those facing financial difficulty, the industry can work towards maintaining confidence and stability across the housing market.
They will likely need to consider the impact of various factors on the market, including the availability of affordable housing, to ensure that borrowers continue to receive the support they need.
