Mortgage borrowers have been handed a welcome boost after arrears and repossessions fell, but there is also a warning for the private rental market, with landlord possession claims against tenants rising by 6%.
Arrears and repossessions decline
New figures from UK Finance show that there were 77,940 homeowner mortgages in arrears of 2.5% or more of the outstanding balance in the second quarter of 2026. That was down 1% on the previous quarter. Buy-to-let mortgage arrears fell even more sharply, dropping 6% to 8,390.
Official Ministry of Justice figures show mortgage possession claims plunged 20% compared with the same quarter last year, from 6,539 to 5,232. Possession orders fell 17%, warrants dropped 18% and repossessions by county court bailiffs were down 14%.
Industry reaction
The figures will provide some much-needed reassurance to households still feeling the squeeze from years of higher mortgage costs.
Darryl Dhoffer, Founder at The Mortgage Geezer, said: "The latest data brings some genuine relief. Homeowner mortgages in arrears fell 1% to 77,940, while buy-to-let arrears dropped 6% to 8,390. Reassuringly, repossessions also plummeted, down 8% for homeowners (1,150) and 22% for landlords (630).
"As a bad credit mortgage specialist, I see this every day where falling behind on your mortgage payments doesn't mean giving up your home. With arrears representing just 0.89% of all mortgages, the market is showing resilience. If you're struggling, specialised options exist to help restructure your debt early and keep you in control."
Nouran Moustafa, Practice Principal & IFA at Roxton Wealth, told Newspage "the worst of the mortgage shock is moving behind us".
She added: "These numbers are more reassuring than alarming. UK Finance shows homeowner arrears down 1% quarter-on-quarter and buy-to-let arrears down 6%, while possessions fell 8% and 22%. MoJ data shows mortgage claims down 20% year-on-year and repossessions down 14%."
"That tells me pressure is easing rather than building into a new repossession crisis. The one number I would not ignore is 49.1 weeks from claim to repossession, up from 42.9 weeks.
"Repossessions are therefore a very lagging indicator: some households losing homes today may have fallen into trouble nearly a year ago, when rates and affordability looked very different."
Rental market warning
The figures are not all good news, however, with the figures showing that landlord possession claims rose from 22,352 to 23,635 over the year – a 6% increase.
Mark Alexander, Founder at Property118.com, said more controls on landlords is having an effect. He added: "That does not support a narrative of landlords being forced out by their banks. It suggests more owners are deciding, or finding it necessary, to recover possession even while mortgage distress across the sector is falling. The timing also matters. This quarter included the final month before the Renters’ Rights Act took effect and the first two months afterwards, so the sharp rise in accelerated claims warrants close scrutiny."
Tony Sanchez, Founder at Bridging Loan Directory, said the figures showed mortgage distress was easing, but warned of a lengthy delay between borrowers getting into trouble and losing their homes.
He said: "The two releases point in the same direction. UK Finance recorded fewer homeowner and buy-to-let mortgages in arrears, while Ministry of Justice figures show mortgage possession claims, orders, warrants and repossessions all falling compared with last year.
"They measure different parts of the process and should not be treated as interchangeable, but together they suggest mortgage distress is easing rather than simply being delayed between stages. There is still a substantial lag. The median time from a mortgage claim to repossession has increased to 49.1 weeks, so completed cases can reflect financial difficulties that began almost a year earlier."
Stephen Perkins, Managing Director at Yellow Brick Mortgages, said: "The overall direction is encouraging, with fewer mortgages in arrears and possession activity also moving the right way.
"But falling arrears don’t necessarily mean every borrower has recovered financially. Some will have caught up, while others may have sold or ultimately lost their property, so the figures need to be viewed together."
