UK Finance Buy-to-Let Mortgage Market Update

January 21, 2026

UK Finance today releases its buy-to-let (BTL) mortgage market update for Q3 2025, looking at trends in lending to borrowers accessing the market.

In Q3 2025 there were 59,467 new buy-to-let loans advanced in the UK, worth £10.9 billion. This was up quite significantly compared with the same quarter in the previous year, 22.7 per cent by number (28.2 per cent by value).

The average gross buy-to-let rental yield for the UK in Q3 2025 was 7.15 per cent, compared with 6.93 per cent in the same quarter in the previous year.

The average interest rate across all new buy-to-let loans in the UK was 4.85 per cent in Q3 2025. This was 15 basis points lower than in the previous quarter, and 37 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 Q3 2025 was 215 per cent, up from 195 per cent in Q3 2024 and 210 in the previous quarter.

The number of BTL fixed rate mortgages outstanding in Q3 2025 was 1.44 million, 2.3 per cent up on a year previously. In contrast, the number of variable rate loans outstanding fell by 9.7 per cent to 488,000.

At the end of Q3 2025 there were 10,420 buy-to-let mortgages in arrears greater than 2.5 per cent of the outstanding balance. This was down 850 from the previous quarter.

There were 900 buy-to-let mortgage possessions taken in Q3 2025, up 28.6 per cent from 700 in the same quarter a year previously.

 

Megan Eighteen, ARLA Propertymark President, comments:

“These figures point to a more positive sentiment in the buy-to-let market during the third quarter of 2025. However, the rise in buy-to-let mortgage possessions over the same period a year earlier is a clear reminder that affordability pressures persist for some landlords, particularly those facing higher borrowing and operating costs.

“Today’s rise in inflation, reflecting further price increases in December, will be closely watched and could play a significant role in shaping the Bank of England’s next steps on the base rate. Any sustained easing in inflation would help restore confidence and improve borrowing conditions.

“As the year progresses, it would be encouraging to see this translate into a more stable and affordable buy-to-let market. Continued investment in the sector remains essential to support supply and deliver much-needed new rental homes at a time when demand continues to outstrip availability.”

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