The number residential households in early arrears fell from 28,670 to 26,560 between Q2 2020 and Q2 2021 – or by just over 7% – shows new data from UK Finance.

Early arrears constitutes households in arrears of 2.5% to 5% of their balance.

The number of households in significant arrears – that is, those with an arrears greater than 10% – however, rose during the same time period.

In Q2 2020, there were 24,060 households in this category. By Q2 2021, this number had grown to 27,910 – an increase of 16%.

UK Finance believes this trend to be “largely driven by customers with more complex circumstances who had several missed payments before the pandemic.”

It adds: “Early trends shows that arrears are moving on twin tracks; Covid-19 related support has helped customers to remain out of arrears but those in pre-pandemic financial difficulty have continued to build up arrears, notwithstanding the application of payment deferrals.”

Overall, UK Finance reports 76,270 total homeowner properties in arrears in the second quarter of this year, up from the 74,830 counted in Q2 2020.

In the world of buy-to-let, properties in early arrears rose slightly, from 2,380 in Q2 2020 to 2,580 in Q2 2021.

And in significant arrears, the respective values read as 1,270 to 1,710.

UK Finance is keen to point out that these rises occur from a “low base”.

Taking all arrears categories into account, the total number of BTL properties in arrears in Q2 2021 came to 6,020 compared to 5,010 a year before then.

There were 210 homeowner possessions in the second quarter of this year and 230 for BTL. UK Finance gives some important context to these figures in saying: “It is important to note that year-on-year comparisons will look unusually large due to the Possession Moratorium that was in place from March 2020 to 1 April 2021. No involuntary possessions took place in this period.”

It adds that it expects possessions to increase “slowly as the backlog of cases from 2020 unwind.”

UK Finance managing director of personal finance Eric Leenders says: “The mortgage payment deferral scheme continued to help customers throughout Q2 2021, resulting in a decline in early arrears on the previous quarter and lower levels than before the pandemic began.

“The scheme has now come to an end and the majority of customers who used it have now returned to making regular payments.”

Meanwhile, Bluestone Mortgages chief executive Steve Seal warns: “While it’s encouraging to see mortgage arrears remain close to historic lows, the picture could look very different in the coming months.

“Mortgage payment holidays have now come to an end, and with furlough and the self-employment income support scheme set to end in September, there’s likely to be more homeowners who will struggle to keep up with mortgage repayments.

“This may only be short-term for some borrowers, however it is something that could impact their credit profile in the long run.”