According to UK Finance, new UK buy-to-let loans reached £11.2 billion in the fourth quarter of 2025, up 18.2% in number and 21.3% in value year-on-year.
The trade body said growth was largely concentrated in remortgage activity.
The average gross buy to rent The rental yield for Great Britain in the fourth quarter of 2025 was 7.18%, compared to 6.99% in the same quarter of the previous year.
The number of outstanding fixed-rate mortgages for rental in the fourth quarter of 2025 was 1.46 million, 2% more than a year earlier.
The number of outstanding loans with variable interest rates, on the other hand, fell by a further 9.8% to 466,000.
The average interest rate for all new buy-to-let loans in the UK was 4.77% in the fourth quarter of 2025.
This was eight basis points lower than the previous quarter and 32 basis points lower than the same quarter of 2024, UK Finance said.
Reflecting the downward movement in interest rates, the average interest coverage ratio (ICR) for the UK in the fourth quarter of 2025 was 218%, compared to 201% in the fourth quarter of 2024 and 215% in the previous quarter.
At the end of Q4 2025, there were 9,520 buy-to-let mortgages with payment arrears of more than 2.5% of the outstanding balance. This was a decrease of 910 compared to the previous quarter.
770 mortgage properties were closed in the fourth quarter of 2025, an increase of 10% compared to the 700 in the same quarter a year earlier.
James Tatch, head of analysis at UK Finance, said: “Investors have been taking advantage of falling interest rates to refinance their loans, although instability in the mortgage market has pushed up funding costs in recent weeks, which could dampen the growth of buy-to-let mortgages somewhat.
“However, a combination of the regulatory and tax measures already in place, combined with those in the Renters’ Rights Bill, which comes into force next month, are likely to continue to dampen new demand activity. We expect a broadly flat picture for buy-to-let lending this year, compared to levels seen a year ago.”
Raheel Butt, head of buy-to-let underwriting at MT Finance, said: “This data provides a definitive conclusion to a year marked by professional resilience. In the last quarter, the momentum of year-on-year credit value growth reached its peak. This activity was fueled by continued easing in financing costs.
“Ultimately, the fourth quarter performance confirms that the barrier to entry has evolved. New entrants are now passing by the low interest rates of the past, but are instead entering the market with a refined focus on strategic capital gains and long-term portfolio growth. Buy-to-let is not just business as usual; it is evolving into a more disciplined, professional and institutionalized sector.”