In Q4 2025, there were 80,490 homeowner mortgages in arrears of 2.5% or more of the outstanding balance, a 4% decline compared with the previous quarter

UK Finance has reported a further decline in mortgage arrears and possessions in the fourth quarter of 2025, with overall levels remaining significantly below historic highs.

In Q4 2025, there were 80,490 homeowner mortgages in arrears of 2.5% or more of the outstanding balance, a 4% decline compared with the previous quarter.

The overall proportion of homeowner mortgages in arrears stood at 0.92%, while 0.5% of buy-to-let mortgages were in arrears.

Within the homeowner total, 27,780 mortgages were in the lightest arrears band, representing between 2.5% and 5% of the outstanding balance, 4% fewer than in the previous quarter.

Buy-to-let arrears also dropped, falling 9% quarter-on-quarter to 9,520 cases, with 3,480 in the lightest arrears band, down 7%.

By comparison, at the height of the global financial crisis in Q2 2009, there were 216,400 homeowner and buy-to-let mortgages in arrears.

Possessions also dropped in Q4. A total of 1,210 homeowner mortgaged properties were taken into possession, 13% fewer than in the previous quarter.

Buy-to-let possessions declined 14% to 770 properties.

UK Finance said overall possession numbers remain significantly below long-term averages and broadly in line with pre-pandemic levels. More than two-thirds of possessions relate to mortgages arranged at least 10 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 per cent 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, he said.

As ever, the number of possessions remain low by historic standards and are broadly in line with pre-pandemic levels, he said.

He added: 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.

UK Finance reiterated that contacting a lender to discuss support options will not impact a borrower’s credit score and urged customers concerned about repayments to seek help early.