Expert comment: UK Finance Q3 arrears and possessions data - Phoebus Software

12 November 2026

Richard Pike, chief sales and marketing officer at Phoebus Software:

“Despite the growing pressures on household finances over recent months, UK borrowers remain resilient in the face of rising costs, with mortgage arrears falling for a ninth consecutive quarter.

“The continued improvement in arrears helps to reinforce confidence in the UK mortgage sector and support lenders' appetite to lend. However, there is a risk that improving arrears figures mask some of the underlying pressures facing households. The impact of higher borrowing costs and inflation can take time to feed through, particularly for borrowers who have yet to refinance onto higher rates.

“Meanwhile the sharp increase in unsecured borrowing raises questions about whether some households are relying on credit to assist with everyday spending.

“Combine this with real household disposable income expected to come under further pressure next year, lenders cannot afford to become complacent. The risk is increasingly concentrated among those households facing a combination of higher borrowing costs and changing personal circumstances.

“Maintaining this progress will depend on lenders having a clear understanding of the pressures facing their customers, rather than relying solely on arrears as an indicator of financial difficulty. Changes in income, household circumstances or mortgage affordability can all create vulnerabilities before they show up in payment data. Having the right information and servicing capabilities to understand these changes will help lenders tailor their approach, provide appropriate support and prevent temporary financial difficulties from becoming longer-term problems.”