The number of homeowner mortgages in arrears fell by 3% in the second quarter of 2025 compared to Q1, new figures published by UK Finance have shown.

The banking trade body’s latest data indicated that there were 87,380 homeowner mortgages in arrears of 2.5% or more of the outstanding balance during Q2.

Within this total, 29,840 homeowner mortgages were in the lightest arrears band – between 2.5% and 5% of the outstanding balance – a figure also down 3% from the previous quarter.

UK Finance also revealed that in the buy-to-let (BTL) market, the number of BTL mortgages in arrears fell by 5% to 11,270 in Q2 compared with the previous quarter. Of these, 4,100 BTL mortgages were in the lightest arrears band, down 6% compared with Q1.

Overall, the banking body stated that the proportion of mortgages in arrears remains “low”, at 1% of homeowner mortgages and 0.58% of BTL mortgages.

Director of mortgages at UK Finance, Charles Roe, said: “Arrears are continuing to fall across both homeowner and BTL mortgages, reflecting resilience in the market. The proportion of mortgages in arrears also remains below long-term averages, even amid the current economic uncertainty.”

Although possessions increased slightly, UK Finance stated that they also remain low compared to historic norms. A total of 1,340 homeowner mortgaged properties were taken into possession in Q2, 10% higher than in the previous quarter, while 790 BTL mortgaged properties were repossessed, a figure 2% down from Q1.

Managing director of MorganAsh, Andrew Gething, commented that rising repossessions show “a growing number of borrowers in distress”.

“The sector has rightly prided itself on using repossession only as a final option,” Gething added. “Given the circumstances though, there is real risk to this philosophy and that possessions could escalate further without early, personalised intervention. To do this properly and ensure a good outcome, we need to understand the case and more importantly, we need to understand the customer and their circumstances.

“By the very nature that they are in arrears, they are likely to be financially vulnerable, but as our data shows the vast majority of those in arrears have a compounding health or lifestyle vulnerability. Firms need to be able to identify and understand these wider challenges to provide the right type of support.”

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