UK Finance has published its latest mortgage arrears and possessions figures for Q4 2025, showing a continued easing in arrears across both homeowner and buy-to-let lending.
There were 80,490 homeowner mortgages in arrears of 2.5% or more of the outstanding balance, a 4% reduction on the previous quarter. Overall arrears levels remain low, representing 0.92% of homeowner mortgages and 0.5% of BTL mortgages.
The number of cases in the lightest arrears band — between 2.5% and 5% of the balance — also fell to 27,780, down 4% quarter on quarter.
BTL arrears declined more sharply, dropping 9% to 9,520 mortgages, including 3,480 in the lowest arrears band, a 7% fall.
For context, arrears peaked at 216,400 cases in Q2 2009 during the global financial crisis.
Possession activity also eased and remains well below historic norms. A total of 1,210 homeowner mortgaged properties were taken into possession in Q4 2025, 13% fewer than in the previous quarter.
Some 770 BTL mortgaged properties were repossessed, down 14% quarter on quarter. Overall, current possession levels remain significantly lower than long-term averages.
UK Finance noted that most possessions continue to relate to older lending, with more than two-thirds linked to mortgages taken out at least ten years ago.
James Tatch, head of analytics at UK Finance, said: “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%. 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.
“Lenders remain committed to supporting customers who may be struggling. If you are worried about your mortgage payments, please contact your lender as soon as possible to discuss the tailored help available.”
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