MORTGAGE arrears and possessions have fallen as experts say the new figures “bring some genuine relief” – but landlord possession claims rise.
There were 77,940 homeowner mortgages in arrears of 2.5% or more of the outstanding balance in the second quarter of 2026, 1% than in the previous quarter, new UK Finance data showed.
There were 8,390 buy-to-let mortgages in arrears of 2.5% or more of the outstanding balance in the second quarter of 2026, 6% fewer than in the previous quarter.
Compared to the same quarter in 2025 there were decreases in mortgage possession claims from 6,539 to 5,232 (20%) and orders from 4,421 to 3,651 (17%), warrants from 3,804 to 3,101 (18%) and a decrease in repossessions by county court bailiffs from 1,166 to 1,008 (14%), according to new Ministry of Justice data.
When compared to the same quarter in 2025 there were increases in landlord possession claims from 22,352 to 23,635 (6%), orders remained stable and there were decreases in warrants from 10,349 to 9,715 (6%), and repossessions from 6,767 to 6,560 (3%).
Experts said the figures suggest mortgage borrowers are proving more resilient than feared following several years of higher borrowing costs, with both homeowners and landlords seeing arrears move in the right direction.
While thousands of households remain behind on their repayments, experts say the latest numbers provide further evidence that financial pressure is easing rather than developing into a wider repossession crisis.
But the picture in the private rental sector is more complicated. Landlord possession claims against tenants increased by 6% compared with a year earlier even as buy-to-let mortgage arrears fell, suggesting landlords seeking possession of properties are not necessarily doing so because they are struggling to meet their own mortgage payments.
Experts say this will be important to watch as the rental market adjusts to the Renters’ Rights Act.
Mark Alexander, Founder at Norwich-based 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.
“Policymakers should remember that tenant security depends not only on stronger rights, but also on retaining enough responsible landlords and homes to rent. If letting becomes commercially unattractive or unnecessarily risky, viable landlords will leave.”
Relief
Tony Sanchez, Founder at Bridging Loan Directory, pointed out there is a “substantial lag” before repossessions feed into the system.
He added: “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.
“The contrasting figure is landlord possession claims, which rose by 6% even as warrants and repossessions fell. That does not yet establish the effect of recent rental regulation, but it is a separate pressure worth monitoring.”
Darryl Dhoffer, Founder at Bedford-based The Mortgage Geezer, said the data is encouraging.
He added: “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, said “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.
“So today’s falling arrears matter more for where we’re heading. The data suggests the worst of the mortgage shock is moving behind us, but the clean-up is still working through the system.”
Encouraging
Stephen Perkins, Managing Director at Norwich-based Yellow Brick Mortgages, said the contrast with the rental sector is “interesting”.
He added: “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.
“The contrast with the rental sector is interesting. Buy-to-let mortgage arrears and possessions are falling, yet landlord possession claims have increased. That suggests the pressures facing landlords and tenants extend beyond landlords simply struggling to pay their own mortgages.”
Jamie Alexander, Mortgage Director at Romsey-based Alexander Southwell Mortgages, said we are moving in the right direction.
He added: “The headline is more reassuring than alarming. Homeowner arrears down, buy-to-let arrears down, possessions falling across the board. For a period that followed one of the sharpest rate cycles in recent memory, that is genuinely encouraging.
“The number worth sitting with is the 49.1 week median time from claim to repossession. That lag means completed cases today often reflect difficulties that started almost a year ago, when the rate environment looked very different. So falling arrears now matter more than the repossession figures as a guide to where the market is heading.
“The one watch point is landlord possession claims against tenants, which rose 6% even as mortgage distress in the sector fell. That tells a different story. Overall the data suggests the worst of the mortgage shock is behind us. It is not clean yet, but the direction is right.”
Photo by Sasha Freemind on Unsplash.
