The latest UK Finance figures reveal that there were 84,100 homeowner mortgages in arrears of 2.5% or more of the outstanding balance, which is 4% down on the prior quarter.
Within that, 28,940 homeowner mortgages were in the lightest arrears band of between 2.5% and 5% of the outstanding balance, a 3% drop on Q2.
Looking at BTL mortgages in arrears, there were 10,420 such cases, a decrease of 8% on the previous quarter.
In the lightest arrears band, 3,750 BTL mortgages were in arrears, which is 9% lower than Q2.
UK Finance said the overall proportion of mortgages in arrears was low, at 0.97% of homeowner mortgages and 0.54% of BTL mortgages.
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Possessions rise in Q3 but are below long-term averages
UK Finance said there were 1,390 homeowner mortgages properties taken into possession, an increase of 4% compared to Q2.
On the BTL side, 900 mortgaged properties were taken into possession, a rise of 14% on the prior quarter.
UK Finance said that even with the increase, it is “significantly below long-term averages”, with current levels in line with those seen five years before the pandemic.
It added that possessions taking place were predominantly relating to older mortgages, with over two-thirds being for mortgages arranged around 10 years ago.
The report said: “For customers who have been struggling with payments for a long time, repossession enables them to exit their mortgage while retaining as much of their home’s equity as possible.
“However, lenders will always seek to ensure customers remain in their homes, with possession only ever taking place as a last resort once all other options have been explored with the customer.”
Charles Roe, director of mortgages at UK Finance, said: “The total number of mortgages in arrears continued to fall in Q3, as they have done since Q1 2024, which is a positive sign. While possessions have risen slightly, they predominantly relate to mortgages arranged more than 10 years ago and remain low by historic[al] standards and broadly in line with pre-pandemic levels.
“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.”
