The number of residential mortgages in arrears fell to 88,200 in Q2 this year, the lowest level since records began in 1994, according to UK Finance.
This means 0.8 per cent of the 11 million oustanding mortgages in the UK are behind on at least 2.5 per cent of the amount owed.
The figure is 5 per cent lower than the previous record of Q1 this year, when 92,600 homes were in arrears.
The second quarter also saw a fall in the number of mortgages across all arrears bands, including those with the highest levels of arrears.
In the same period, 25,200 mortgages had arrears of 10 per cent or more, down 5 per cent from 26,500 in the preceding quarter.
UK Finance says this “brought a welcome end” to a run of five successive quarters where this figure edged upwards from 23,400 in Q1 2016.
The number of properties taken into possession also fell in the second quarter from 1,900 to 1,800.
This represents 0.02 per cent of all mortgages.
The figure was the same as in the final quarter of last year, and is the lowest figure since quarterly data was first published in 2008.
UK Finance head of mortgages Paul Smee says: “Borrowers are being helped by low interest rates, but mortgage costs are certain to rise at some stage.
“It is important therefore for customers to plan ahead and consider how their finances would be affected in those circumstances.”