Analysis of the buy-to-let market in the fourth quarter of 2025 shows that, compared to the same period a year earlier, the number of loans granted had increased ‘quite significantly’ by 18.2%, according to banking body UK Finance.
This growth was mainly due to the large number of refinancings in the last three months of 2025.
But the average interest rate also rose during the same period from 6.99% at the end of 2024 to 7.18% in the fourth quarter of last year.
The report also shows that the average interest rate on buy-to-let mortgages during this period was 4.77%. This is eight basis points lower than the previous quarter and 32 basis points lower than the same quarter of 2024.
At the end of Q4 2025, no fewer than 9,520 buy-to-let mortgages had payment arrears of more than 2.5% of the outstanding balance. This is 910 fewer than in the previous quarter.
However, a whopping 770 properties were put on buy-to-let mortgages during this period – an increase of 10% on the same quarter a year earlier.
Rachel Springall, financial expert at Moneyfactscompare.co.uk, said this is indicative of the problems faced by buy-to-let landlords, who have been hit by stricter legislation and rising running costs.
“It’s squeezing them from all sides,” she said. “Repossessions of buy-to-let properties have increased by 10% year-on-year, and it is worrying to think that landlords may be failing to keep up with mortgage repayments.
“The cost of living is forecast to worsen in the coming months, and this will be exacerbated if landlords have to move away from cheap fixed rates as mortgage rates have risen.
“Those taking out a mortgage now compared to the start of last month will face higher repayments of around £1,300 more per year. This is based on a £250,000 loan, over 25 years at 5.45%, versus 4.66% in early March 2026.”
However, Louisa Sedgwick, mortgage director at Paragon Bank, said the figures indicated landlord confidence was starting to improve.
“The data shows a clear recovery in activity, with both lending volumes and values increasing significantly compared to the same quarter of the previous year,” she added.
“Although the figures predate the latest rise in geopolitical tensions and the resulting pressure on interest rates and mortgage prices, they still point to the underlying resilience in the sector. Where conditions are stable and returns remain achievable, landlords continue to invest against the backdrop of continued demand for rental properties and limited supply.”