Homeowner and BTL arrears continue to edge down as lenders maintain support
Mortgage arrears and possessions fell again in the final quarter of 2025, with UK Finance also emphasising that lenders remain ready to support borrowers experiencing financial difficulty.
Latest figures from the trade body showed that in Q4 2025, there were 80,490 homeowner mortgages with arrears of at least 2.5% of the outstanding balance, a fall of 4% from the previous quarter. The share of loans in arrears remains modest, at 0.92% of homeowner mortgages and 0.5% of buy-to-let loans.
Within the homeowner total, 27,780 accounts were in the lowest arrears band, where missed payments represent between 2.5 and 5% of the balance. This segment was 4% smaller than three months earlier.
Buy-to-let arrears also declined. The number of BTL mortgages in arrears fell by 9% quarter on quarter to 9,520. Of these, 3,480 BTL loans were in the lightest arrears band, down 7% on the previous quarter.
Arrears remain well below levels seen during the global financial crisis. In Q2 2009, at the peak of that period, there were 216,400 homeowner and BTL mortgages in arrears.
Possession activity also reduced in Q4 2025. A total of 1,210 homeowner mortgaged properties were taken into possession in the quarter, 13% fewer than in Q3.
On the BTL side, 770 mortgaged rental properties were repossessed, a 14% fall compared with the previous quarter. Overall, possession numbers remain significantly beneath long‑term averages.
“The number of mortgages in arrears continued to fall in Q4, with BTL arrears down 25% compared to the end of 2024, and homeowner arrears down 13%,” said James Tatch (pictured right), head of analytics at UK Finance.
“We have also seen a decline in possessions in Q4 due to lenders’ commitment to keep people in their homes over the Christmas period. As ever, the number of possessions remain low by historic standards and are broadly in line with pre-pandemic levels.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, believes the six base rate reductions in the past 18 months have eased affordability. “With two or three more potential cuts forecast in base rate this year, this should further alleviate the pressure on borrowers,” he said.
Borrowers advised to contact lenders for support
According to UK Finance, lenders are maintaining a range of tools to help customers manage repayments where their circumstances change, including for those whose budgets remain under pressure from higher rates or living costs.
The trade association has urged customers to contact their lender promptly if they are worried about meeting repayments, so that tailored solutions can be discussed. Speaking to a lender about support options does not, in itself, affect a borrower’s credit score, UK Finance stressed.
“Lenders remain committed to supporting customers who may be struggling,” Tatch said. “If you are worried about your mortgage payments, please contact your lender as soon as possible to discuss the tailored help available.”
Harris also pointed out that the UK Finance figures “suggest that lenders are showing forbearance and working with borrowers to try and find a solution when the latter find themselves in difficulty.”
“For a lender to take repossession of a property really is the last resort – they would much prefer an open dialogue way in advance of this needing to happen,” he added.
“There may be options open to the borrower, whether it is just a blip or a longer-term issue, such as a payment holiday, switching to interest only for a while or extending the mortgage term. However, it is important that this conversation is started sooner rather than later and that borrowers don’t ignore the problem as that will only make matters worse.”
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