There were 49,590 new buy-to-let (BTL) loans made in Britain, worth £8.8 billion in the second quarter of the year, data from UK Finance shows.
The figures show this is relatively flat compared to the same quarter of the previous year, with a decline of 2.6% in numbers and 0.2% in value.
The average gross BTL rental yield for the UK in the second quarter of 2025 was 7.26%, compared to 6.9% in the same quarter of the previous year.
The average interest rate for all new BTL loans in the UK was 5.0% in the second quarter of 2025. This was 2 basis points higher than the previous quarter and 19 basis points lower than the same quarter of 2024.
Reflecting the downward movement in interest rates, the average BTL interest coverage ratio (ICR) for the UK in the second quarter of 2025 was 210%, compared to 192% in the second quarter of 2024 and 201 in the previous quarter.
The number of outstanding BTL fixed-rate mortgages in the second quarter of 2025 was 1.47 million, 5.5% more than a year earlier.
The number of outstanding loans with variable interest rates, on the other hand, fell by 18.0% to 463,000.
At the end of the second quarter of 2025, there were 11,270 BTL mortgages with payment arrears of more than 2.5% of the outstanding balance. This was 560 less than the previous quarter.
790 BTL mortgages were concluded in the second quarter of 2025, an increase of 11.3% compared to the same quarter a year earlier.
Commenting on the UK financial figures, Louisa Sedgwick, managing director of mortgage at Paragon Bank, said: “Although mortgage repayments were lower than in the first quarter of the year and compared to the same period in 2024, they should be seen in the context of the market disruption caused by the stamp duty changes at the end of March.”
“Landlords have brought forward transactions to take advantage of the higher stamp duty thresholds and reduce their tax burden.”
“There were over 9,500 mortgage home purchases in March, compared to less than 3,500 in April, highlighting the impact of the stamp duty changes on the normal flow of business. However, market activity returned to positive growth in the second quarter and into the third quarter.”
“More broadly, it is also interesting to note an increase in the value of outstanding balances. These have increased since the second half of last year and are now above £300 billion, something not seen since the second quarter of 2023.”
Propertymark Arla president Mgan Eighteen added: “These mixed results highlight the continued uncertainty facing the buy-to-let market, driven by wider economic pressures.”
“Inflation remains stubbornly high, interest rates are still high compared to pre-pandemic levels, and stamp duty thresholds are less favorable than the same period last year.”
“Combined with the anticipation surrounding the upcoming autumn budget, many investors are choosing to postpone decisions until there is more clarity.”
“That said, there are still reasons for cautious optimism. In some parts of the country, rental yields have improved compared to this time last year, and the number of buy-to-let mortgages in arrears has fallen since the previous quarter.”
“We hope that economic conditions will stabilize in the near future, supporting a stronger and more confident buy-to-let sector.”