The number of mortgages in arrears of 2.5% or more has reached its lowest level since 1994 at 88,200.
The number of properties taken into possession also declined in Q2 2017 to 1,800.
Paul Smee, head of mortgages at UK Finance, said: “These figures show that the overwhelming majority of borrowers are managing their mortgage payments successfully.
“The recent improvement in the number of mortgages with high levels of arrears is particularly welcome.
“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.”