UK Finance Buy-to-Let Mortgage Market for Q4 2025
UK Finance releases its buy-to-let (BTL) mortgage market update for Q4 2025, looking at trends in lending to borrowers accessing the market.
In Q4 2025 there were 59,489 new buy-to-let loans advanced in the UK, worth £11.2 billion. This was up quite significantly compared with the same quarter in the previous year, 18.2 per cent by number (21.3 per cent by value), with the growth largely concentrated in remortgage activity.
The average gross buy-to-let rental yield for the UK in Q4 2025 was 7.18 per cent, compared with 6.99 per cent in the same quarter in the previous year.
The number of BTL fixed rate mortgages outstanding in Q4 2025 was 1.46 million, two per cent up on a year previously. In contrast, the number of variable rate loans outstanding fell by a further 9.8 per cent to 466,000.
The average interest rate across all new buy-to-let loans in the UK was 4.77 per cent in Q4 2025. This was eight basis points lower than in the previous quarter, and 32 basis points lower than in the same quarter of 2024.
Reflecting the downwards movement in interest rates, the average buy-to-let interest cover ratio (ICR) for the UK in Q4 2025 was 218 per cent, up from 201 per cent in Q4 2024 and 215 in the previous quarter.
At the end of Q4 2025 there were 9,520 buy-to-let mortgages in arrears greater than 2.5 per cent of the outstanding balance. This was down 910 from the previous quarter.
There were 770 buy-to-let mortgage possessions taken in Q4 2025, up 10 per cent from 700 in the same quarter a year previously.
James Tatch, Head of Analytics at UK Finance, said:
“The Buy-to-Let market overall was resilient at the end of last year, with the number of loans advanced around a fifth higher than at the same time the previous year. But, with growth concentrated in remortgage markets, new demand for BTL purchase remains fragile, falling slightly in Q4 compared with the same quarter a year ago.
“Investors took advantage of falling interest rates to refinance their borrowing, although instability in the mortgage market in recent weeks has pushed up borrowing costs, which may well dampen the growth BTL remortgaging somewhat.
“However, a combination of the regulatory and tax measures already in place, combined with the measures in the Renters’ Rights Bill, which will come into force next month, are likely to continue to weigh down on new demand activity. We expect a broadly flat picture for BTL purchase lending this year, compared to levels seen a year ago.”
Megan Eighteen, President of ARLA Propertymark (Association of Residential Letting Agents), comments:
“Latest figures from UK Finance show buy-to-let resilience, but this is largely driven by remortgaging rather than new investment, highlighting continued fragility in purchase activity.
“Strong tenant demand continues to underpin the sector, providing some stability for existing landlords, although wider economic uncertainty, including global events, may influence borrowing costs in the months ahead. However, tax and regulatory changes, alongside the Renters’ Rights Act, which is soon to commence in England, continue to limit new entrants.
“A more balanced approach that supports both tenants and responsible landlords would help encourage investment and improve supply, easing upward pressure on rents over time.”
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