The latest data shows that the number of buy-to-let (BTL) mortgages in arrears also fell, down 6% compared with the previous quarter, to 11,830.

The overall proportion of mortgages in arrears remains low, at 1.03% of homeowner mortgages and 0.61% of BTL mortgages.

The number of homeowner and BTL mortgages in arrears in Q1 2009, the peak in arrears numbers during the global financial crisis, was 209,600.

During the quarter, the number of homeowner and BTL mortgages in early arrears fell, which suggests that any rise in total arrears in the next quarter will be limited.

UK Finance director of mortgages Charles Roe says: “The number of mortgages in arrears fell slightly compared to the previous quarter and the arrears numbers appear to now be on a downward trend. The recent cuts in interest rates and mortgage rates will also help households with their monthly bills.”

“This is a positive development, but we recognise that some households may still be struggling. Lenders are committed to supporting anyone facing financial difficulties and offer a range of tailored solutions.”

Meanwhile, Target group sales and growth lead Melanie Spencer states: “Arrears may look good now but employment levels deteriorated in March. Chancellor Rachel Reeves’ £20bn tax raid on employers has squeezed firms’ profits and figures released by the Office for National Statistics have revealed the number of payrolled employees fell by 53,000 over the first three months of the year.”

“Their early estimate of payrolled employees for April showed a decrease by 33,000. The number of job vacancies has also fallen again, with the rate of decline increasing in the last few months.”

“The business case for hiring has been weakened by a perfect storm of last month’s increased employer national insurance contributions and above-inflation increases to the minimum wage, alongside a wave of measures in the Employment Rights Bill which will make hiring staff riskier and costlier. The labour market is clearly cooling.”

“Weakening labour market activity will inevitably feed into an increase in greater arrears in the future. That’s coming at banks and building societies fast – and when it arrives, unprepared lenders will feel like they’ve been hit by an express train.”

The data also found that while possession numbers increase, they remain low compared to historic norms.

A total of 2,030 homeowner and BTL mortgaged properties were repossessed in Q1 2025, which is 85% lower than the 13,200 seen in Q1 2009.

Possessions currently taking place predominantly relate to older mortgages, more than two-thirds of possessions relating to mortgages arranged at least a decade ago.

Spicerhaart Corporate Sales divisional director David Miller comments: “It is really positive to see mortgage arrears continue to fall across both residential and buy-to-let. While possessions do creep up – likely pointing to greater difficulties in higher arrears band – they still remain at historic lows and demonstrate the good work of lenders.”

“In recent weeks and months, we’ve certainly seen positive changes with rate reductions across the market and the recent cut to the base rate, which is likely not to be the last. This will certainly help with the overall arrears picture moving forward – although we cannot underestimate the prospect of sticky inflation and potential pressures around the labour market.”