Target Group comments on UK Finance Arrears and Possessions

13 August 2026

Melanie Spencer, growth director at Target Group, said:

“A further fall in mortgage arrears suggests that despite the financial pressures households have faced in recent years, mortgage borrowers are managing to stay in the black. Meanwhile, lenders continue to ensure that any mortgage distress remains contained, highlighting their good work on early intervention and forbearance. While positive, it’s important to view these latest figures against an economic backdrop that remains complex and difficult to predict.

“The UK economy has so far managed to fare reasonably well in light of the conflict in the Middle East – as evidenced once again by this morning’s resilient GDP data. The likes of energy price pressures and shipping disruption pose a real threat to inflation, interest rate expectations and to mortgage pricing. Even with the base rate remaining unchanged, we have seen movements in swap rates and lender funding costs influence the rates available to borrowers – a picture that could yet move further and affect those approaching the end of fixed-rate deals.

“As a result, falling arrears shouldn’t mean complacency. There’s no question that borrowers will continue to be tested as they come to refinance and lenders need to be ready to identify and support those customers as soon as their circumstances change. While possessions have declined in this quarter, lenders still need to be alive to this challenge too, managing these cases effectively and sensitively.”