The total number of homes behind on repayments was at 264,862 in the final three months of last year, down by 5.3pc on a year before and the lowest amount for any quarter since counting of the data began in 2007.
The data, published by the Bank of England and the Financial Conduct Authority, also showed there were 29,208 new arrears cases, 3% fewer than a year before. This figure also marked a six-year low.
The number of repossessions fell by 21% to 6,137.
There were also further signs of more buyers striving to pay their mortgage when they had fallen behind.
The proportion of problem loans receiving some repayments hit 62%, a figure that has risen every quarter for 18 months.The improvements come against a backdrop of a revitalised property market, aided by government schemes such as Help to Buy, and with banks and building societies under pressure to show leniency to those struggling to cope with their debts.
Low interest rates have also helped households ward off financial disaster. Last week marked the fifth anniversary of the Bank Rate falling to 0.5%. The market is pricing in the first increase for the second quarter of next year, which could put the market, and buyers, under pressure.
House prices increased by around 8% last year, according to indices from Halifax and Nationwide, which will have helped those in financial difficulty by making it easier for them to sell and downsize.
The Bank's figures also showed the gross mortgage amounts advanced were at their highest level since 2008. Lending to first-time buyers was at its highest level since 2007.
However, the ongoing improvement in the market came as Mark Carney, Governor of the Bank of England, warned about lending standards. He told the Treasury Select Committee he was concerned that an improvement in the housing market could lead to a worsening of mortgage underwriting.
Mr Carney said that underwriting standards of mortgage providers at present are quite high and that his concern is that those underwriting standards will deteriorate and that that deterioration itself would be fed by general improvement in the housing market.
Lenders were warned last month that they must do more to treat customers in mortgage arrears fairly.
The Financial Conduct Authority said the industry had improved since its last review in 2009 but warned that front-line staff should have better knowledge so they could make informed decisions on difficult individual circumstances.
Borrowers most at risk of falling into arrears if rates rise should be identified, the regulator said, with plans put in place on how to treat them.
