UK Mortgage Arrears Fall, Possessions Up: Q1 2026
Mortgage arrears across the UK fell again in the first quarter of 2026, but the number of homes repossessed edged slightly higher, according to figures published by UK Finance on 14 May 2026. There were 79,110 homeowner mortgages in arrears of 2.5% or more of the balance — down 2% on the previous quarter — while 1,250 homeowner properties were taken into possession, 3% more than in Q4 2025. For Scottish homeowners who have fallen behind, the headline is reassuring but the detail matters: repossession is rising from a low base, and acting early is what keeps you in control. Here is what the numbers mean and what your options are in Scotland.
Mortgage arrears are still falling
UK Finance, the banking and finance trade body, reported that in Q1 2026 there were 79,110 homeowner mortgages in arrears of 2.5% or more of the outstanding balance — a 2% fall compared with the final quarter of 2025. Buy-to-let arrears fell faster still, down 6% on the quarter and 24% year-on-year to 8,960 mortgages.
In proportional terms the picture remains benign: just 0.91% of homeowner mortgages and 0.47% of buy-to-let mortgages were in arrears. To put that in context, UK Finance notes that at the peak of the global financial crisis in the second quarter of 2009, some 216,400 mortgages were in arrears — nearly three times today's figure. You can read the full release on the UK Finance website.
Key takeaways
- UK Finance recorded 79,110 homeowner mortgages in arrears in Q1 2026 — down 2% on the previous quarter.
- Only 0.91% of homeowner mortgages and 0.47% of buy-to-let mortgages are in arrears.
- 1,250 homeowner properties were repossessed in Q1 2026, up 3% on Q4 2025 but flat year-on-year.
- More than two-thirds of repossessions relate to mortgages taken out at least a decade ago.
- In Scotland, lenders must follow pre-action requirements and go through the courts — and a managed sale can often avoid repossession altogether.
Possessions edged up — but stay low by historic standards
The one figure moving the other way was possessions. A total of 1,250 homeowner mortgaged properties were taken into possession in Q1 2026 — 38 more (a 3% rise) than the previous quarter, though flat compared with the same period a year earlier. A further 810 buy-to-let properties were repossessed, up 5% on the quarter.
Crucially, these numbers remain far below long-term averages, and the pattern is unusual. UK Finance reports that more than two-thirds of possessions relate to mortgages arranged at least a decade ago — long-running cases where, after every other option has been exhausted, repossession lets a borrower exit the mortgage while retaining as much equity as possible.
James Tatch, Head of Analytics at UK Finance, said: "The number of mortgages in arrears continues to fall for both residential and buy-to-let mortgages. While possessions are up very slightly on the previous quarter, they remain low by historic standards. Lenders stand ready to support customers who may be worried about meeting their repayments. We would always recommend customers contact their lender as soon as possible to discuss the tailored help available."
What the figures mean in Scotland
UK Finance's data covers the whole of the UK, including Scotland, but the legal route to repossession north of the border is distinct — and more protective of the homeowner. Under the Home Owner and Debtor Protection (Scotland) Act 2010, a lender cannot simply repossess a residential property. It must first serve a formal calling-up notice, comply with a set of pre-action requirements (including making reasonable efforts to agree a repayment plan), and then apply to the sheriff court, which will only grant repossession if it considers it reasonable in all the circumstances.
That extra layer of process is why early action carries so much weight in Scotland: the system is built to give homeowners time and options before any court order is made. Detailed Scottish court repossession statistics lag behind the UK-wide lending data, but the official guidance and your rights are set out clearly on mygov.scot. If your home has become difficult to mortgage or sell, our guide on what to do when your home is unmortgageable may also help.
If you are struggling: your options in Scotland
The single most important message from both UK Finance and Scottish guidance is the same — talk to your lender early. Contacting them to ask about support will not affect your credit score, and the longer you wait, the fewer options remain. Practical routes include:
- Speak to your lender. They may agree a temporary payment reduction, a payment holiday, or extending your mortgage term to lower monthly costs.
- Get free, independent advice. Citizens Advice Scotland, Shelter Scotland and the National Debtline offer free help, and can represent you if a case reaches court.
- Check the pre-action requirements have been met. A lender that has not followed them properly may not be granted a repossession order.
- Consider selling on your own terms. A controlled sale almost always returns more equity to you than a forced repossession sale.
Our detailed walk-through on how to stop repossession of your home in Scotland covers each of these in full, including the role of the court and where to find emergency support.
How a managed or auction sale can beat repossession
Where keeping the home is no longer realistic, selling before the lender forces a sale is usually the better financial outcome. A lender in possession sells to clear the debt, not to maximise your return — so any equity left after costs is what reaches you. Selling yourself, while you still control the timetable, protects that equity and your credit record.
This is where selling at auction can be especially useful for homeowners under time pressure. A successful auction bid is backed by a non-refundable deposit and a committed buyer, with completion typically inside 28 days — fast enough to settle arrears before a court date, and certain enough to avoid the fall-throughs that derail roughly one in three traditional sales. It also works for properties in poor condition or with a secured loan attached, which can be hard to sell on the open market. Investors and cash buyers actively seek out repossessed and below-market properties across Scotland.
Julie McAndrews, founder of Scotland Property Auction, says that the families she speaks to almost never regret acting early — the regret is in waiting. A planned sale, she notes, lets you leave on your own terms with as much of your equity as possible, rather than having the timing and the price decided for you in court.
If arrears are mounting and you want to understand what your property would realistically achieve, get a free 60-second valuation, or read our wider June 2026 Scottish market update to see how current conditions affect your options.
Founder & Director of Scotland Property Auction. Julie has spent over a decade helping Scottish homeowners, landlords and executors sell property quickly at auction — covering Home Reports, missives, repossession and the modern method of auction.
More about Julie →✔ Last reviewed June 2026 by Julie McAndrews. We keep our guides current with Scottish property law and market conditions.