Mortgage arrears in the UK have decreased for the tenth quarter in a row, with new UK Finance figures showing a fall in both homeowner and buy-to-let arrears in Q3 2026. Homeowner mortgage arrears were down 10% year-on-year to 76,080, while buy-to-let arrears fell 22% to 8,170.
Despite the fall in arrears, property repossessions increased compared to the previous quarter. Lenders took possession of 1,840 properties, a 3% rise on Q2, though this was 20% below last year's level. Buy-to-let possessions specifically rose 10% to 690 during the quarter, but remained 23% lower than a year earlier.
Industry figures have welcomed the reduction in arrears but have cautioned about potential risks from higher mortgage rates and rising costs. Richard Pike of Phoebus Software suggested that improving arrears figures might mask underlying financial pressures on households, particularly for those yet to refinance.
Ian Harris, president of NAEA Propertymark, noted that mortgage costs and wider household expenditure continue to affect buyer confidence. Mark Harris, chief executive of SPF Private Clients, highlighted concerns about a rise in landlords with minor mortgage arrears, suggesting new laws like the Renters’ Rights Act could be making conditions tougher.
David Miller of Spicerhaart Corporate Sales warned that borrowers moving off cheaper mortgage deals onto higher rates could face increasing pressure. Lenders are exploring options such as longer mortgage terms, interest-only payments, and payment holidays to assist struggling borrowers.