According to the latest UK Finance figures, the value of new BTL loans came to £10.5bn, which is up 46.8%.
UK Finance added that the average interest rate for new BTL loans was 4.99%, which is 0.1% down on the prior quarter and 41 basis points down on Q1 2024.
Looking at the interest cover ratio (ICR), in Q1 2025, the ICR was 202%, a rise from 190% in the same period last year and unchanged from Q4 2024.
The report continued on to say that the average gross BTL rental yield for the period came to 6.94%, a rise from 6.88% in the same period last year.
The number of BTL fixed rates outstanding in the first quarter of this year was 1.44 million, which is around 5% up on a year before.
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The proportion of BTL variable rate loans outstanding stands at 500,000, a contraction of 15.8% year-on-year.
On the arrears side, there were 11,830 BTL mortgages in arrears greater than 2.5% of the outstanding balance, which is a drop of 780 from the prior quarter.
The report added that there were 810 BTL mortgage possessions in the period, an increase of 28.6% on the same quarter last year.
Louisa Sedgwick, managing director of mortgages at Paragon Bank, said:“BTL lending in the first quarter of the year was the highest seen since the mini Budget and in line with pre-pandemic levels, primarily driven by a surge in new purchase activity ahead of the changes to stamp duty thresholds at the end of the quarter.
“This shows that with the right market conditions landlords will invest. Demand currently exceeds supply and is forecast to continue, driven by factors such as population increases and household formation changes. To meet this demand and help to moderate rent inflation, as well as to provide a home to millions of tenants across all walks of life, it is essential to facilitate an attractive investment environment with balanced regulation and economic stability.”
