Homeowner mortgages in arrears have fallen by 10% year-on-year to 76,080 in Q3, marking the tenth consecutive drop quarter-on-quarter.

UK Finance’s latest data showed that the number of buy-to-let (BTL) arrears were also down 22% year-on-year, and 3% on the quarter to 8,170.

Mortgages in arrears made up 0.87% of all homeowner mortgages, and 0.43% of all BTL mortgages. While the number of BTL mortgages in the lightest arrears band increased modestly compared with the previous quarter, it remained 18% lower than a year earlier.

UK Finance also revealed that while possession numbers rose slightly quarter-on-quarter from 1,780 to 1,840, this was 20% down year-on-year.

This was the second consecutive year-on-year fall, with numbers significantly lower than historical peaks.

Within the total, homeowner possessions were down 17% year-on-year and unchanged in the quarter, remaining at their lowest since Q4 2024.

Although BTL possessions increased 10% on the quarter to 690, they remained 23% below a year earlier.

Head of analytics at UK Finance, James Tatch, said the latest data shows that borrowers are continuing to manage their mortgage payments, despite rising cost pressures.

He stated: "With homeowner arrears falling for a tenth consecutive quarter, and possessions well below historic highs, the overall picture is one of a resilient mortgage market, with the vast majority of customers continuing to make their repayments on time.

"Despite the positive news on falling arrears, we know customers are currently dealing with a rising cost of living, as well as the impact the war in the Middle East is having on interest rates.

"Mortgage lenders remain committed to supporting customers who are facing difficulties. Anyone worried about keeping up with their repayments should contact their lender as soon as possible to discuss what tailored support is available to them."

President at Propertymark, Ian Harris, added that while it is encouraging to see reductions across the board, "affordability remains a key challenge for the housing market".

He concluded: "Mortgage costs and wider household expenditure continue to influence buyer confidence and people’s ability to move home. At the same time, maintaining confidence in property as a long-term investment is important, with responsible landlord investment playing a valuable role in supporting housing supply.

"Ultimately, a healthy housing market depends on people having the confidence and financial ability to buy, sell and invest in property. While these figures are welcome news, improving affordability and creating a more stable environment for property investment must remain priorities."

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