The number of buy-to-let mortgages in arrears fell by 22% year-on-year in the third quarter of 2026, reaching 8,170, according to the latest figures from UK Finance.
The number was also down 3% compared with the previous quarter, while mortgages in arrears accounted for 0.43% of all buy-to-let mortgages.
Buy-to-let possessions remained 23% below their level a year earlier, although they increased by 10% quarter-on-quarter to 690.
The figures form part of UK Finance's latest Mortgage Arrears and Possessions data for Q3 2026, which also recorded a continued decline in homeowner arrears.
The number of homeowner mortgages in arrears fell for the tenth consecutive quarter to 76,080, representing a 10% annual decline and a 2% reduction compared with Q2. Mortgages in arrears accounted for 0.87% of all homeowner mortgages.
While the number of buy-to-let mortgages in the lightest arrears band increased slightly compared with the previous quarter, it remained 18% lower than a year earlier. Arrears numbers in all other bands fell across both the homeowner and buy-to-let markets.
Across the wider mortgage market, 1,840 properties were taken into possession during the third quarter. This was 3% higher than the 1,780 recorded in Q2 but 20% lower than the same period in 2025.
Homeowner possessions fell 17% year-on-year and remained unchanged quarter-on-quarter, at their lowest level since Q4 2024.
James Tatch, Head of Analytics at UK Finance, said: "The latest arrears and possessions data shows that borrowers are continuing to manage their mortgage payments despite rising cost pressures."
"With homeowner arrears falling for a tenth consecutive quarter, and possessions well below historic highs, the overall picture is one of a resilient mortgage market, with the vast majority of customers continuing to make their repayments on time."
"Despite the positive news on falling arrears, we know customers are currently dealing with a rising cost of living, as well as the impact the war in the Middle East is having on interest rates."
"Mortgage lenders remain committed to supporting customers who are facing difficulties. Anyone worried about keeping up with their repayments should contact their lender as soon as possible to discuss what tailored support is available to them."
