Residential and buy-to-let mortgage arrears and possessions fell in Q2 2026, according to data from UK Finance.

There were 77,940 homeowner mortgages in arrears by 2.5% or more of the outstanding balance in Q2, down 1% from the previous quarter.

Of these, 27,100 were in the lightest arrears category, representing between 2.5% and 5% of the outstanding balance. This was also 1% lower than in Q1.

The number of buy-to-let mortgages in arrears fell by 6% over the quarter to 8,390. Within this total, 2,980 mortgages were in the lightest arrears band, down 7% from the previous quarter.

Arrears accounted for 0.89% of all outstanding homeowner mortgages and 0.44% of buy-to-let mortgages during the quarter.

The number of mortgaged properties taken into possession also decreased in Q2 and remained significantly below the long-term average.

A total of 1,150 homeowner mortgaged properties were taken into possession, an 8% fall from the previous quarter and a 14% decrease compared with the same period a year earlier.

There were 630 buy-to-let mortgaged properties taken into possession during the quarter, down 22% from Q1 and 20% compared with a year earlier.

UK Finance said possessions currently taking place mostly involve older mortgages, with more than two-thirds relating to mortgages arranged at least 10 years ago.

For customers who have struggled with payments over an extended period, possession can allow them to exit their mortgage while retaining as much of their home’s equity as possible.

However, lenders said they will continue to seek ways to help customers remain in their homes, with possession only taking place as a last resort after all other options have been explored.

UK Finance urged anyone concerned about meeting their mortgage repayments to contact their lender as early as possible to discuss the options available.

It said that contacting a lender to find out what support is available will not affect a borrower’s credit score.

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 2003, and remain significantly below the long-term historic average.”

He added: “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.”