The percentage of BTL mortgages in arrears fell in the first quarter of 2026, according to the latest UK Finance update.
In the first quarter, there were 8,690 BTL mortgages in arrears of 2.5% or more, which was 6% fewer than in the last quarter of 2025.
This was down 24% when compared on a year-on-year basis.
Within the total, there were 3,220 BTL mortgages in the lightest arrears band (representing between 2.5% and 5% of the outstanding balance). This was 7% fewer than in the previous quarter.
On a year-on-year basis, these were down by 26%.
In the first quarter, there were BTL 810 possessions. Though this was 5% more than the preceding quarter, it was the exact same from the first quarter of 2025.
David Miller, divisional director at Spicerhaart Corporate Sales, warned that while this is “clearly great news”, it was important “to address the elephant in the room”.
“The landscape is changing rapidly with the ongoing Iran conflict derailing the future path of interest rates and inflation,” said David.
“In recent months, we have seen the number of instructions coming to us has increased – particularly for support with assisted voluntary sales.”
Melanie Spencer, growth director of Target Group, part of Tech Mahindra, added: “This is the thin end of the wedge.
“Lenders should aim to get on the front foot to ensure their servicing operations have the right colleagues, processes, and platforms in place to handle the increased demand and deliver the proper customer outcomes to meet their regulatory obligations.”
