Affordable mortgages have eased pressure on borrowers, expert says
The number of UK mortgages in arrears fell in the second quarter of 2025, according to new data from UK Finance, even as the rate of repossessions among homeowners saw a modest increase.
UK Finance reported that 87,380 homeowner mortgages were in arrears of 2.5% or more of the outstanding balance during Q2, a 3% reduction from the previous quarter. Within this group, 29,840 mortgages were in the lowest arrears band (between 2.5% and 5% of the balance), also down 3% from Q1.
Buy-to-let mortgage arrears also declined, falling 5% to 11,270. Of these, 4,100 BTL mortgages were in the lightest arrears band, representing a 6% drop compared to the previous period. The overall share of mortgages in arrears remained low, at 1% for homeowners and 0.58% for BTL borrowers.
Despite the improvement in arrears, the number of homeowner properties taken into possession rose to 1,340 in Q2, up 10% from the previous quarter. Meanwhile, repossessions of BTL properties decreased by 2% to 790.
“Arrears are continuing to fall across both homeowner and buy-to-let mortgages, reflecting resilience in the market,” said Charles Roe, director of mortgages at UK Finance. “The proportion of mortgages in arrears also remains below long-term averages, even amid the current economic uncertainty.
Mary-Lou Press, president of industry body NAEA Propertymark, said the drop in mortgage arrears should provide some relief to the many people who have been struggling with the cost of living over the last few years.
“This also shows that introducing more affordable mortgage products has helped ease the pressures that many people have faced with paying for their mortgage. Should interest rates continue to drop, then this will hopefully result in more affordable mortgage products reaching the marketplace. As overall affordability increases, we should see a positive effect of repossessions decreasing further in the future.”
UK Finance noted that repossession is only pursued after all other avenues have been explored, and is intended to help customers who have been unable to resolve payment difficulties retain as much equity as possible. The banking trade body added that mortgage lenders would continue to offer support for customers in managing their payments, even as financial circumstances change.
“Lenders remain committed to helping customers manage their payments, and we urge anyone concerned to contact their lender earlyt,” Roe said. “Support is always available and exploring available options with your lender will not affect your credit score.”
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