UK Finance has released its latest mortgage arrears and possessions data for Q4 2025, showing a continued decline in both homeowner and buy-to-let arrears compared with the previous quarter. Possession numbers also fell and remain significantly below long-term historic averages, as lenders continue to offer support to borrowers facing financial pressure.
Property experts have shared their views on the latest figures and what they signal for the wider housing market.
David Miller, divisional director at Spicerhaart Corporate Sales, said: “The positive momentum continues on arrears with yet another drop in both residential and BTL cases. Given the expected path of both mortgage rates and the bank rate, it’s hoped that this will continue to be the pattern. It’s certainly helped by the proactive work of lenders to intervene early with support. High LTV product choice at an 18-year high may still alarm some with long memories, but we’re in a strong position with economic conditions improving and lenders more than ready to provide proactive support.
It’s positive to see a drop in possessions on the previous quarter, in part due to the December moratorium – albeit still up on the previous year. On the ground, we are seeing increasing challenges around leasehold apartments, with the number coming into possession rising over the last 12 months and now accounting for nearly 50% of the properties we are managing. Severe service charges and doubling ground rent are the tip of the iceberg of issues for lenders, which lead to repossession and then significantly reduce demand or interest from buyers or BTL investors. That’s on top of increasing difficulty dealing with management companies, causing delays and additional expense.
If we are serious about keeping possessions low and, as a last resort, for lenders, we need to tackle the leasehold reform head-on. As we’ve seen, leasehold is a growing driver behind these decisions and an area where reform is desperately needed for all parties. It’s another reason why lenders need trusted partners with real expertise in asset management – particularly in this complex area of the market.”
Adam Oldfield, CEO at Phoebus Software, on UK Finance’s Mortgage Arrears and Possessions Update for Q4 2025:
“The latest UK Finance data shows arrears have fallen for the sixth consecutive quarter for both homeowners and buy-to-let. This suggests that property owners are managing their finances tightly, despite the persistent cost-of living pressures. This morning’s ONS data shows the UK economy grew just 0.1 per cent in December, lower than expected. However, the reduction in the base rate in December has seen mortgage rates come down, helping to boost affordability for those on tracker and variable rates.
The latest figures also show a welcome fall in the number of mortgage repossessions in Q4. While the rate is still below the long-term average, the number of repossessions in 2025 was higher than the previous two years. Lenders need to remain vigilant, and ensure their systems are flagging any potential issues so the correct interventions can be made. The right servicing software should automate customer engagement while also helping lenders to identify cases that require personal attention.”
Mel Spencer, growth director at Target Group, said:
“The data for Q4 2025 paints a cautiously optimistic picture for the mortgage market, with arrears continuing on the downward trajectory they have been on since early 2024. Overall rates are still at historically low levels. Owner occupiers and landlords proved remarkably resilient in Q4, despite lingering economic pressures. I am starting to think this trend might continue. Not only is effective lender support paying off, but we can see the economy is improving. Retail spending growth more than doubled last month as shoppers held out for the January sales. The S&P purchasing manager index for services and manufacturing in January pointed to the fastest expansion of activity since August 2024. Nationwide, Halifax and Rightmove all reported a rebound in house prices at the start of the year. And consumer confidence rose for the second consecutive month in January, according to the research company GfK. This is just the latest sign of improved momentum. Added to that, Andrew Bailey has suggested there is scope for some further easing of the Bank rate soon.”
