According to the latest figures from UK Finance, the value of new BTL loans advanced came to £9.6bn, which is 47% up on Q4 last year.
The average gross BTL rental yield for the UK was estimated at 7%, which compares to 6.74% in the same quarter last year.
The average interest rate across all new BTL loans was 5.09%, which is 0.13% lower than the prior quarter and 0.61% down on the same period in 2023.
The report noted that the average BTL interest cover ratio (ICR) was 201%, up from 190% in Q1 2024 and 21 basis points higher than a year before.
The number of BTL fixed rates outstanding was estimated at 1.43 million, 4.4% up on the same period last year.
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The number of variable rate loans outstanding dropped by 15.9% to 518,000.
The report found that there were 12,610 BTL mortgages in arrears greater than 2.5% of the outstanding balance. This is a drop of 390 on the prior quarter and 7% down annually.
There were around 700 BTL mortgage possessions in Q4 2024, unchanged from the prior quarter but a rise of 29.6% on the same quarter a year previously.
Russell Anderson, commercial director of mortgages at Paragon Bank, said the figures show a “resurgent BTL market throughout 2024, with strong growth in both purchase and remortgage activity”.
He continued: “The data supports our view that landlords are astutely managing their lettings businesses, borrowing to invest in higher-yielding properties or refinancing to proactively manage debt across portfolios and improve privately rented housing stock.
“While encouraging, this increase is against a low base in 2023 and there continues to be an acute supply-demand imbalance in the private rented sector, underpinning rental inflation. More investment is needed into the sector to meet forecast levels of demand, so we would hope to see the momentum of last year continuing as the market recovers.”
