The number of homeowner mortgages in arrears fell by 4% in the third quarter, new figures from UK Finance have shown.

Q3 saw 84,100 mortgages in arrears of 2.5% or more of the outstanding balance.

Within the total, the banking trade body’s figures revealed there were 28,940 homeowner mortgages in the lightest arrears band – which includes those between 2.5% and 5% of the outstanding balance – a level 3% down from the previous quarter.

UK Finance also reported 10,420 buy-to-let (BTL) mortgages in arrears of 2.5% or more of the outstanding balance, 8% fewer than in the previous quarter. Within the BTL total, there were 3,750 mortgages in the lightest arrears band, which was 9% fewer than in Q2.

In total during Q3, mortgages in arrears accounted for 0.97% of all homeowner mortgages outstanding, and 0.54% of all BTL mortgages.

President of NAEA Propertymark, Mary-Lou Press, commented: “Falls in both homeowner and BTL 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.”

Despite the fall in mortgages in arrears, UK Finance reported a rise in the number of mortgaged properties taken into possession in Q3.

A total of 1,390 homeowner mortgages were repossessed in the quarter, 4% more than in Q2, while 900 BTL mortgaged properties were repossessed which was 14% up from Q2.

“The slight rise in possessions highlights that pressures still exist, particularly for those on older mortgage products who have been struggling for some time,” Press added. “It remains crucial that anyone experiencing financial difficulty reaches out to their lender or seeks independent, qualified advice as early as possible.”

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