There were 59,467 new buy-to-let (BTL) loans worth £10.9 billion made in the third quarter of 2025, data from UK Finance shows.
The latest data shows an increase of 22.7% compared to the same quarter of the previous year.
The research also found that the average gross BTL rental yield for Britain in the third quarter of 2025 was 7.15 percent, compared to 6.93 percent in the same quarter of the previous year.
The average interest rate for all new BTL loans in the UK was 4.85% in Q3 2025.
This represented a decrease of 15 basis points compared to the previous quarter, and 37 basis points lower than in the third quarter of 2024.
Reflecting the downward movement in interest rates, the average BTL interest coverage ratio (ICR) for the UK in Q3 2025 was 215%, up from 195% in Q3 2024 and 210 in the previous quarter.
Meanwhile, the number of outstanding BTL fixed-rate mortgages in the third quarter of 2025 stood at 1.44 million, up 2.3% from a year earlier.
The number of outstanding loans with variable interest rates, on the other hand, fell by 9.7% to 488,000.
At the end of the third quarter of 2025, there were 10,420 BTL mortgages in arrears of more than 2.5% of the outstanding balance, a decrease of 850 compared to the second quarter of 2025.
The data also showed that 900 BTL mortgages were made in the third quarter of 2025, up 28.6% from 700 in the same quarter a year earlier.
Commenting on the figures, Louisa Sedgwick, mortgage director at Paragon Bank, said: “The clear increase in the value and number of buy-to-let mortgages closed, compared to the previous quarter, and especially the same period a year ago, shows how landlords will invest in buy-to-let properties when market conditions allow.”
“The third quarter saw strong mortgage refinancing activity, the highest since the last quarter of 2022, driven in part by landlords releasing equity to fund new acquisitions. This continued the trend of the first half of the year, which saw more equity drawn on mortgage refinancing for portfolio expansion than any other corresponding period since 2018.”
“Seen in the context of the latest encouraging figures, and with interest rates expected to continue to fall, we expect the momentum we are seeing in both the purchase and remortgage markets to continue into 2026.”
Meanwhile, Marylen Edwards, Finance Director at MT Finance, said: “This data provides a compelling snapshot of a market in strategic transition. As the sector prepares for the changes to the Renters’ Rights Bill that come into effect from May 1, professional landlords are not just surviving but recalibrating.”
“We are seeing year-on-year increases in credit values, while the average rate for new BTL loans has fallen to 4.85 percent, down 37 basis points from a year ago. This softening is driving portfolio recalibration as landlords lock in stability ahead of the May 1 deadline.”
SPF Private Clients director Howard Levy added: “Many smaller portfolio landlords who held in their own names have exited the market, paving the way for the larger buy-to-let investors to provide equity for this still-increasing demand.”
“Looking at a specific quarter is somewhat misleading as the various changes that occurred in 2024 with taxes, relief and the SDLT allowance increase in the October 2024 Budget may have distorted that quarter’s figures.”
“It will be interesting to see if the number of loans granted returns next quarter compared to the first quarter of 2025.”
“For me the most interesting point is that ICR coverage was 215%. This could potentially mean that rates have been booked and set at a low point, that LTVs are low on average or that rents have increased dramatically.”
“In reality it is probably a combination of all of this, but if rents continue to rise to cover the extra costs the government is demanding from landlords, we can expect this figure to rise even further.”