Buy to let lending rises to £10.8bn

Buy to let lending rose during the first three months of 2026, with landlords securing 58,272 new loans worth £10.8 billion, data from UK Finance reveals.

Even with higher BTL borrowing costs, both figures were higher than a year earlier.

UK Finance said the number of advances increased by 3.26% compared with the first quarter of 2025, while their total value climbed by 7.02%.

Average gross BTL yields reached 7.21%, up from 6.93% during the same period last year.

Buy to let loan interest

The average interest rate across new buy to let loans was 4.71%, six basis points below the previous quarter and 29 basis points lower than in the first three months of 2025.

Lower borrowing rates helped lift the average interest cover ratio to 221%.

That compares with 218% in the final quarter of last year and 204% a year earlier.

Fixed-rate deals continued to account for a growing share of outstanding mortgages, rising by 1.4% year-on-year to 1.47 million, while variable-rate loans fell by 9.5% to 453,000.

At the end of March, 8,960 buy to let mortgages were in arrears of more than 2.5% of the outstanding balance – which is 560 lower than in the previous quarter.

Lenders took possession of 810 BTL properties during the quarter, unchanged from the corresponding period of 2025.

BTL moving in right direction

Louisa Sedgwick, the managing director of mortgages at Paragon Bank, said: “Although buy to let lending moderated from the stronger levels seen at the end of 2025, activity in the first quarter remained ahead of the same period last year, indicating that the market continues to move in the right direction where conditions are supportive.

“Remortgaging remained a significant driver of lending and was higher than a year earlier.”

She added: “This points to landlords actively refinancing as they respond to broader affordability considerations and manage their portfolios, including supporting longer-term plans such as expansion and investment in existing properties.”

Landlords prefer fixed rates

Mark Harris, the chief executive of mortgage broker SPF Private Clients, said landlords continued to favour fixed rates because of the certainty they offered during volatile pricing conditions.

He said: “With this downwards trend a further factor encouraging landlords to invest.

“With the average interest cover ratio rising thanks to falling lending rates, landlords are not overstretching themselves.”

He added: “With the number of landlords in arrears falling and possessions unchanged, the outlook for the sector is brighter than one might think given that the regulatory and tax burden on investors is increasing.”