UK Finance has released its latest mortgage arrears and possessions data for Q3 2023, which revealed that the number of homeowner and buy-to-let (BTL) mortgages in arears has risen broadly in line with 2023 UK Finance forecasts.

Possession figures have decreased 9% for homeowners and remained steady for BTL properties compared with the previous quarter. UK Finance analysis shows that the total number of homeowner mortgages in arrears is currently 1% of the outstanding mortgage stock, and only 0.57% for BTL mortgages.

UK Finance’s latest data shows that there were 87,930 homeowner mortgages in arrears in Q3 2023, 7% more than the previous quarter. The number of BTL mortgages in arrears was 11,540, a 29% increase during the same period.

The increases in arrears are driven by the combined impact of both cost-of-living pressures and higher interest rates. In particular, interest rate pressures are felt more acutely in the BTL sector, where landlords may not be able to raise rents to cover the increases in their payments.