The trade association said mortgage arrears remained close to historically low levels in the first three months of 2021.

From March 2020 to the end of March 2021, banks and lenders were offering payment holidays of up to six months to borrowers whose finances had been affected by the pandemic.

Almost 2.9 million mortgage payment deferrals were granted while the scheme was active. For most borrowers who took one, payment deferrals provided a short-term solution to a change in their economic circumstances due to the CoOVID-19 pandemic, allowing mortgage borrowers to defer payments to meet other financial commitments. For borrowers who need additional support beyond the six month payment deferral, lenders are continuing to offer tailored forbearance.

UK Finance’s latest figures show a small increase of 230 mortgages in arrears compared with the previous quarter, with a total of 77,640 home owner mortgages in arrears of 2.5% or more of the outstanding balance. Within the total, there were 27,280 mortgages with significant arrears representing 10% or more of the outstanding balance. This was an increase of 620 on the previous quarter.

UK Finance said this figure has slowly increased since early 2020 but from a low base, largely driven by customers who had several missed payments before the pandemic.

Eric Leenders, of UK Finance, said: “While there was a slight rise in total arrears in Q1 2021 compared to the historic low levels seen before the pandemic, the additional support from lenders has helped many mortgage customers stay out of arrears.

“With the economic impact of COVID-19 continuing to be felt, we anticipate there will be further increases in mortgage arrears during 2021.”

He urged that any customer who is concerned about their finances should contact their lender early to discuss the options and tailored support available to them.