Mortgage arrears and property repossessions fell again in the final quarter of 2025. Trade bodies have said the figures show that, despite ongoing cost pressures, most borrowers remain on track with their repayments and lenders are continuing to offer support to those facing financial difficulty.
In the three months to December, 80,490 homeowner mortgages were in arrears of at least 2.5% of the outstanding balance. That represents a 4% fall compared with the previous quarter. Overall, loans in arrears account for 0.92% of homeowner mortgages and 0.5% of buy-to-let mortgages, indicating that arrears levels remain relatively low.
Arrears levels edge down
Within the total number of homeowner mortgages in arrears, 27,780 accounts were in the lowest arrears band, where missed payments amount to between 2.5% and 5% of the outstanding balance. This group was 4% smaller than in Q3, suggesting fewer borrowers are slipping into early-stage payment difficulty.
Buy-to-let arrears also declined during the quarter. The number of buy-to-let mortgages in arrears fell by 9% to 9,520. Of these, 3,480 loans were in the lightest arrears category, down 7% on the previous quarter.
Current arrears levels remain well below those recorded during the global financial crisis. At the peak in Q2 2009, there were 216,400 homeowner and buy-to-let mortgages in arrears – more than double the latest combined total. The comparison highlights the mortgage market’s relative resilience, despite higher interest rates and ongoing pressure on household budgets over recent years.
Fewer properties taken into possession
Possession activity also eased in the final quarter of the year. A total of 1,210 homeowner properties were taken into possession between October and December, 13% fewer than in the previous quarter. On the buy-to-let side, 770 rental properties were repossessed, a 14% reduction compared with Q3.
Overall, repossession figures remain significantly below long-term averages. Lenders have continued to focus on early intervention and tailored support, aiming to help borrowers stay in their homes wherever possible. Tools available to customers can include temporary payment arrangements, term extensions or other adjustments designed to reflect changing circumstances.
Lenders stand ready to assist customers whose finances remain under strain, whether due to higher mortgage rates, increased living costs or other personal challenges. Borrowers concerned about meeting their repayments are encouraged to contact their lender as soon as possible. Early communication, trade bodies have said, allows for more flexible and personalised solutions, reducing the likelihood that arrears escalate or lead to repossession.
While economic conditions remain uncertain, the latest figures suggest that arrears and possessions are moving in a stable direction. For most mortgage holders, repayments remain manageable, and where difficulties arise, support mechanisms remain in place.
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