UK Finance has reported a drop in mortgage arrears in Q2, with both homeowner and buy-to-let borrowers showing signs of improved resilience despite ongoing economic uncertainty.
The latest figures revealed that the number of homeowner mortgages in arrears of 2.5% or more of the outstanding balance fell by 3% compared with the first quarter of the year, leaving 87,380 mortgages in arrears at the end of June.
Within that, 29,840 cases were in the lightest arrears band of between 2.5% and 5% of the balance, also down 3% on Q1.
The buy-to-let sector also saw improvement, with arrears dropping 5% to 11,270.
Of these, 4,100 cases were in the lightest arrears band, down 6 per cent from the previous quarter.
Overall, just 1% of homeowner mortgages and 0.58% of buy-to-let mortgages were in arrears, with UK Finance noting that the proportion remains low by historical standards.
Possessions rose slightly in Q2, though they remained well below long-term averages.
A total of 1,340 homeowner mortgaged properties were taken into possession, up 10% on Q1, while 790 buy-to-let properties were repossessed, a 2% fall compared with the previous quarter.
UK Finance stressed that repossession is always a last resort, enabling customers who have struggled for a long time to exit their mortgage while retaining as much equity as possible.
Lenders continue to emphasise the availability of tailored support for customers facing financial difficulties.
Borrowers are being urged to contact their lender as soon as concerns about payment arise, with UK Finance making clear that doing so will not affect their credit score.
Charles Roe, director of mortgages at UK Finance, said: “Arrears are continuing to fall across both homeowner and buy-to-let mortgages, reflecting resilience in the market.
“The proportion of mortgages in arrears also remains below long-term averages, even amid the current economic uncertainty.
“Lenders remain committed to helping customers manage their payments, and we urge anyone concerned to contact their lender early. Support is always available and exploring available options with your lender will not affect your credit score.”
