The number of mortgage arrears and property repossessions in the UK fell during the second quarter of 2026, despite continued financial pressure on homeowners and landlords.
Figures from UK Finance show that 1,150 mortgaged homeowner properties were repossessed, an 8% decrease from the previous quarter and 14% lower than the same period last year. Buy-to-let repossessions also dropped, with 630 properties repossessed, down 22% quarter-on-quarter and 20% year-on-year.
Repossessions Remain Below Long-Term Average
UK Finance said the overall number of repossessions remains well below historical averages. Most of the properties being repossessed are linked to older mortgages, with more than two-thirds involving loans that were taken out at least 10 years ago.
The figures suggest that, despite higher borrowing costs and wider affordability concerns, lenders are continuing to work with borrowers who are experiencing financial difficulties.
Mortgage Arrears Also Decline
Mortgage arrears also showed an improvement during the quarter.
There were 77,940 homeowner mortgages with arrears equivalent to at least 2.5% of the outstanding balance. This represented a 1% fall compared with the previous quarter and an 11% decrease from a year earlier.
The buy-to-let market saw an even larger annual improvement. Around 8,390 landlord mortgages were at the same level of arrears, down 6% from the previous quarter and 26% compared with the second quarter of 2025.
James Tatch, head of analytics at UK Finance, described the figures as encouraging, noting that both residential and buy-to-let arrears are falling. Repossessions have also recorded their first year-on-year decline since late 2023.
He urged borrowers who are struggling with repayments to contact their mortgage lender as early as possible.
Lenders Continuing to Offer Support
Mortgage broker SPF Private Clients also highlighted the continued fall in arrears and repossessions, despite mortgage rates rising again following recent geopolitical developments.
Chief executive Mark Harris said the figures suggest lenders are continuing to show forbearance and work with borrowers to find solutions before repossession becomes necessary.
Depending on the circumstances, borrowers may have several options available. These could include temporarily switching to an interest-only mortgage, taking a payment holiday or extending the mortgage term.
However, borrowers are generally encouraged to speak to their lender before their financial situation becomes more difficult to manage.
Affordability Remains a Concern
Although the latest figures provide some positive news for the housing market, financial pressure has not disappeared.
Ian Harris, president of NAEA Propertymark, said the fall in arrears and repossessions was welcome but warned that affordability remains a challenge for homeowners and landlords.
For property owners facing difficulties with mortgage payments, early communication with lenders can provide an opportunity to explore available support before the situation becomes harder to resolve.
What This Means for Property Investors
The decline in buy-to-let arrears and repossessions could indicate that most landlords are continuing to manage higher borrowing costs despite ongoing pressures across the rental market.
However, investors with older or higher-cost mortgages should continue to monitor their cash flow carefully. Rising mortgage costs, taxation, regulation and property maintenance expenses can all affect the profitability of a rental property.
The latest figures are therefore encouraging, but they do not remove the need for landlords and homeowners to plan ahead and seek help early if repayments become difficult.
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