UK mortgage arrears fall as surveyors forecast weakest housing sales since 2023

Arrears keep easing despite cost pressure

UK Finance counted 76,080 owner-occupier mortgages in arrears of 2.5% or more of the outstanding balance at the end of the third quarter of 2026. That figure is 10% lower than a year earlier and 2% below the previous quarter. Buy-to-let loans in arrears numbered 8,170, down 22% on the year and 3% on the quarter. Arrears made up 0.87% of owner-occupier loans and 0.43% of buy-to-let loans, and homeowner arrears have now fallen for a 10th consecutive quarter.

“The latest arrears and possessions data shows that borrowers are continuing to manage their mortgage payments despite rising cost pressures.”

Rate rise adds to household strain

The Bank of England raised its base rate from 3.75% to 4% in the week of 2 November 2026. UK Finance estimated that tracker borrowers face roughly £30 more a month on typical balances. About 87% of owner-occupier mortgages carry fixed rates, yet around 2.3 million of those fixed deals are due to end in 2027. The central bank expects price growth to top out near 5% during the second quarter of 2027.

Repossessions near their lows

Homeowner repossessions reached 1,150 in the quarter, down 17% annually and flat on the previous quarter, and the lowest since the fourth quarter of 2024. Buy-to-let repossessions totalled 690, a 23% annual fall but a 10% rise on the quarter. Total repossessions edged up from 1,780 to 1,840 between the second and third quarters, a level UK Finance said stayed well under long-term peaks. Repossessions therefore moved in different directions by loan type, with buy-to-let cases rising on the quarter while owner-occupier cases held steady.

Surveyors see the weakest outlook since 2023

The Royal Institution of Chartered Surveyors said its October survey gave a net balance of minus 17 for expected sales over the next 12 months, down from plus 1 in September and the weakest since July 2023. Price expectations also fell to minus 17 from zero, the lowest since October 2023. New buyer enquiries and agreed sales both recorded a net balance of minus 24, while a net 36% of respondents reported falling prices. London, East Anglia, the West Midlands and the South East showed weaker price trends than the national average, whereas Northern Ireland kept rising firmly.

“Home buyer demand remains subdued and respondents are bracing for a weaker year ahead for sales given the persistent macroeconomic challenges being faced.”

Sales expectations, next 12 months-17

Price expectations, next 12 months-17

New buyer enquiries-24

Agreed sales-24

Sales expectations, next 12 months

-17 net balance (%)

Price expectations, next 12 months

-17 net balance (%)

New buyer enquiries

-24 net balance (%)

Agreed sales

-24 net balance (%)

Data from the article text

Lenders and the wider market

Average five-year fixed rates for borrowers at 75% loan-to-value climbed to 5.2% by late October, a three-year high, while two-year deals reached 5.4%. Approvals for home loans slid in September to the lowest point since late 2023. The central bank estimates average yearly mortgage payments will reach roughly £700 more by 2029 than its July projection, and about £1,500 above the level before the Iran war. Financial markets expect three quarter-point rate rises by the end of 2027.

Persimmon sales hold up

Persimmon Plc, the York-based housebuilder, kept its guidance for the year while lifting sales. Private forward sales rose 3% to £2.2 billion ($2.92 billion), and the average selling price was 2% higher than a year earlier. Both measures rose even as RICS survey data pointed to weaker demand. The firm's result ran against a protracted slump in the UK housing market.