UK Finance’s latest arrears and possessions data shows a marginal decrease (less than 0.5%) in homeowner mortgages in arrears to 96,070 in Q2 2024, compared with Q1 2024.

The number of BTL properties in arrears showed a marginal increase (just over 0.5%) compared with the previous quarter, to 13,570.

The overall proportion of mortgages in arrears remains low, at 1.10% of homeowner mortgages and 0.69% of BTL mortgages.

Homeowner and BTL properties in early arrears fell by 3% and 6% respectively. This points to fewer customers falling into early arrears and suggests there could be a limited increase in arrears cases in the next quarter. However, the decrease also partly reflects some customers previously in early arrears moving into more serious arrears shortfalls, UK Finance said.

For comparison, the number of homeowner and BTL mortgages in arrears in Q1 2009, the peak in arrears numbers during the global financial crisis, was 209,600 – almost twice the 109,650 seen in the first quarter of this year.

While the percentage of mortgaged properties taken into possession has risen, this is largely due to the HM Courts Service increasing capacity to work through historic arrears cases, UK Finance said.

Some 980 homeowner mortgaged properties were taken into possession, along with 710 BTL mortgaged properties. These numbers remain significantly lower than long-term averages, UK Finance noted.

Charles Roe, director of Mortgages at UK Finance, said: “The number of mortgages in arrears has remained broadly flat compared to the previous quarter. This reflects the fact that, while many households remain under pressure, the challenges of higher rates and the cost of living have begun to ease.”

Richard Pike, chief sales and marketing officer at Phoebus, said: “A 13% increase in possessions of buy-to-lets in the second quarter of 2024 might come as a blow to some. However, we can probably attribute a portion of this to the fallout from the previous high energy and general costs of living that have taken their toll on renters and landlords alike.

“Now that inflation and energy prices have dropped, and the market is so much more buoyant as we move through the second half of 2024, I would hope that the equivalent figures this time next year will look a lot more promising.

“The 8% increase on possessions of homeowner properties can be similarly explained. Gladly, Consumer Duty rules will have helped a lot of homeowners avoid falling into this group, as the handful of lenders who might not have been so understanding during times of financial hardship, are now obligated to help their borrowers as much as possible.”