Buy to let lending jumps 25%

The value of buy to let loans advanced to landlords rose by 25% in the second quarter of 2026 compared with a year earlier, reaching £10.7 billion.

UK Finance recorded 58,051 new loans during the period, an increase of 20.6%.

However, the annual comparison was affected by unusually low activity last year, after BTL borrowers brought forward their transactions ahead of stamp duty changes.

Compared with the first quarter of this year, remortgaging increased slightly while lending for house purchases fell.

Behind the lending increase

James Tatch, the head of analytics at UK Finance, said: “The latest figures point to a more resilient buy to let market, but the headline growth should be viewed in context.”

He added: “Compared with Q1 this year, the market appears more stable, with remortgaging edging up while lending for new purchases eased slightly.

“Looking ahead, higher borrowing costs are likely weighing down on buy-to-let demand, underpinning flatter lending growth across 2026.”

Remortgaging drives landlord borrowing

Remortgages accounted for 39,631 loans, with their total value rising by 20.2% compared with the same quarter last year.

UK Finance said the large number of fixed rate deals expiring had contributed to increased remortgaging activity.

Louisa Sedgwick, Paragon Bank’s managing director of mortgages, is expecting that trend to continue into 2027 as five-year loans taken out in 2021 and 2022 mature.

She said: “Remortgaging continues to be the story of 2026, accounting for approximately three quarters of completed buy to let loans during the period.

“Overall lending has remained fairly robust considering the impact of the Iran War on mortgaging pricing, with the value and number of loans for buy to let house purchase in line with the average quarterly level recorded since 2024, the period when the market entered recovery following the mini-Budget.”

Rates rise while arrears fall

Meanwhile, house purchase loans totalled 16,026, up 23% by number and 27.9% by value on a year earlier, although the number fell by 845 compared with the previous quarter.

The average interest rate on new buy to let loans reached 4.82%, up 12 basis points on the previous quarter but 18 basis points below its level a year earlier.

Gross yields barely moved, averaging 7.27% against 7.26% in the second quarter of 2025.

At the end of June, 8,390 buy to let mortgages had arrears exceeding 2.5%, down 570 on the previous quarter and 25.6% lower than a year earlier.

There were also 630 buy to let mortgage possessions during the quarter, a fall of 20.3% compared with the same period in 2025.

Landlords need competitive finance

Kim Lidbury, the president of ARLA Propertymark, said: “Despite what has been a challenging landscape for the private rented sector throughout the year, it is extremely encouraging to see such a positive uplift in the volume of buy to let mortgage products being taken up.

“Landlords have faced continued uncertainty around the cost of borrowing, affordability and the wider financial commitments associated with property investment.”

She added: “Maintaining access to competitive finance will be crucial in supporting responsible investment, helping existing landlords navigate the changing landscape and encouraging continued investment in the homes needed by tenants across the entire UK.”

Mark Harris, the chief executive of mortgage broker SPF Private Clients, said: “While the Renters’ Rights Act was implemented during the period this data covers, it doesn’t seem to have deterred landlords.

“An increase in new buy to let loans advanced in the second quarter, up on the same period last year, suggest investors still recognise opportunities in the market.”