New BTL lending hits £10.8 billion, UK Finance data shows
New buy-to-let (BTL) lending in the UK totalled 58,272 loans in Q1 2026, worth £10.8 billion, according to UK Finance. The figures represent a 3.26% increase by volume and a 7.02% rise by value compared with the same quarter in 2025.
Remortgaging was the primary driver of growth, with 39,160 BTL remortgage loans advanced during the quarter — up 11.1% year-on-year. By contrast, loans for house purchase fell 14.9% to 16,871.
Value of new buy-to-let mortgage loans
UK quarterly lending, 2020 Q1 – 2026 Q1
Regional performance was mixed. BTL house purchase volumes grew 22.6% in Scotland and 20.6% in Wales, supported by strong rental yields and interest cover ratios. England and Northern Ireland recorded declines of 18.7% and 11.8% respectively.
The average gross BTL rental yield across the UK rose to 7.21% in Q1, up from 6.93% in the same period a year earlier. The average interest rate on new BTL loans stood at 4.71%, six basis points lower than the previous quarter and 29 basis points below Q1 2025.
The average BTL interest cover ratio (ICR) improved to 221% from 204% in Q1 2025 and 218% in the prior quarter, reflecting the downward movement in rates.
Fixed-rate BTL mortgages outstanding reached 1.47 million, up 1.4% year-on-year. Variable-rate loans outstanding fell a further 9.5% to 453,000.
Number of BTL loans outstanding
UK quarterly stock, 2021 Q1 – 2026 Q1
Note: data series begin in 2021 Q1
Arrears greater than 2.5% of the outstanding balance stood at 8,960 at the end of Q1 2026, down 560 from the previous quarter. BTL possessions totalled 810 for the quarter, unchanged from Q1 2025.
"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," commented Louisa Sedgwick (pictured right), managing director of mortgages at buy-to-let specialist Paragon Bank.
"Remortgaging remained a significant driver of lending and was higher than a year earlier. 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.
"The value of outstanding balances also rose above £313 billion, underlining the resilience of the sector and its continuing role in supporting investment in privately rented homes."
For Mark Harris (pictured right), chief executive of mortgage broker SPF Private Clients, the data suggested that landlords had not been deterred by the then imminent implementation of the Renters' Rights Act, noting that the increase in new buy-to-let loans advanced in Q1 pointed to investors still recognising opportunities in the market.
"Perhaps the uptick in average yields explains that – investing in rental property is still working for many landlords and experienced ones, in particular, are expanding their portfolios where opportunities arise," he said.
Harris added that the outlook for the sector was brighter than might be expected given the increasing regulatory and tax burden on investors. He said the market was becoming more professional, with more landlords incorporating to maximise returns.
"Now is not the time for further interference from government — the sector needs time to settle and get to grips with recent legislative changes," Harris stated.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
