What arrears figures do and don't tell you about second-charge mortgages
Second charges sit inside the FCA's mortgage statistics but are never shown on their own. No official source publishes their arrears today.
What the figures are
The FCA's mortgage lending statistics, built from lenders' regulatory returns (known as MLAR), are the official quarterly count of UK mortgage arrears and possessions. The Q2 2026 edition was published on 8 September 2026.1
The value of balances in arrears fell 1.9% on the quarter to £19.7bn, 7.3% lower than a year earlier, and stayed at 1.1% of all outstanding balances. New possessions fell 7.1% to 2,058, and were 15.6% lower than a year earlier.2
MLAR counts a loan as in arrears when missed payments reach at least 1.5% of the outstanding balance, or when the property is in possession.2
Where second charge sits
Second-charge lending has been part of the regulated figures since 21 March 2016, when it moved into the mortgage regime. Before that it sat in the non-regulated figures, the FCA's technical notes say.3
No published table shows it on its own. Lenders report second-charge loans on separate MLAR forms, according to the Bank of England, but the published statistics only split regulated from non-regulated lending. A rise or fall in second-charge arrears can't be read from them.3,4
Counts are of loan accounts, not borrowers. A homeowner with a first-charge mortgage and a second charge from another lender can appear twice, and the two lenders won't always both report a possession, the notes add.3
UK Finance's figures are first charge only
UK Finance publishes its own quarterly update. It counted 77,940 homeowner mortgages in arrears of 2.5% or more of the balance in the second quarter of 2026, 1% fewer than in the first, and 1,150 homeowner possessions, 8% fewer. Its data covers first-charge mortgages only.5
The two series don't match, and aren't meant to. UK Finance uses a 2.5% threshold and grosses its members' figures up to the whole market; MLAR uses 1.5%, counts accounts and includes second charge.5,3
What it means for intermediaries
When a network, lender or client says arrears are falling, they mean the whole market, first and second charge together. There is no official second-charge arrears figure to quote; the FLA's second-charge repossession releases stopped years ago.3
The nearest public evidence on how second-charge cases go wrong is the ombudsman's complaints data. Between April and June 2026 it upheld 35% of second-charge mortgage complaints it resolved, against 26% for first charge.7
The next MLAR edition is due on 8 December 2026 and UK Finance's next update on 12 November 2026.1,6
Sources
- 1FCA, “Mortgage lending statistics, Q2 2026 edition (8 September 2026)”Publication date and the next edition on 8 December 2026.
- 2FCA, “Commentary: mortgage lending statistics, Q2 2026 (8 September 2026)”Arrears balances, share of balances, new possessions and the arrears definition.
- 3FCA, “MLAR statistics technical notes”Second charge in regulated lending from 21 March 2016 (paras 4–5), loan accounts not borrowers (para 22), possessions reporting (paras 24–25), and differences from other series.
- 4Bank of England, “Further details about mortgage lenders and administrators statistics data (updated 31 January 2023)”Lenders report second charge on separate MLAR sub-forms.
- 5UK Finance, “Mortgage arrears and possessions update (13 August 2026)”Q2 2026 homeowner arrears and possessions; first-charge coverage; grossed-up basis.
- 6UK Finance, “Arrears and possessions data”Next update on 12 November 2026.
- 7Financial Ombudsman Service, “Quarterly complaints data: Q1 2026/27 (22 July 2026)”Second-charge and first-charge uphold rates, April to June 2026.
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