According to the latest UK Finance figures on the BTL mortgage market, the value of these new loans came to £10.9bn, which is 28.2% up on the same period the year before.
The report noted that the average gross BTL rental yield in the UK in Q3 2025 was 71.5%, a rise from 6.93% in Q3 2024.
The average interest rate on new BTL loans came to 4.85% in the third quarter of this year, which is 15 basis points lower than the prior quarter and 37 basis points down on the same period in 2024.
The average BTL interest cover ratio (ICR) in Q3 2025 was 215%, which is up from 195% in the same period last and 210% in the prior quarter.
The report added that the number of BTL fixed rate mortgages outstanding in Q3 2025 was 1.44 million, an increase of 2.3% annually.
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The number of variable rate loans outstanding contracted by 9.7% during the period to 488,000.
Looking at arrears, there were 10,420 BTL mortgages in arrears greater than 2.5% of the outstanding balance. This was down 850 from the previous quarter.
UK Finance said there were 900 BTL mortgage possessions taken in Q3 2025, up 28.6% from 700 in the same quarter a year previously.
Louisa Sedgwick, managing director of mortgages at Paragon Bank, said: “The marked uplift in the value and number of buy-to-let mortgages written compared to the previous quarter, and particularly the same period a year ago, demonstrates how landlords will invest in buy-to-let property when market conditions allow.
“The third quarter saw strong levels of remortgage activity, the highest since the final quarter of 2022, partly driven by landlords releasing equity to fund new acquisition. This continued the trend from the first half of the year, which saw more equity withdrawn at remortgage for portfolio expansion than any other corresponding period since 2018.
“Viewed in the context of the latest encouraging figures, and with rates forecast to continue to fall, we anticipate the momentum seen in both the purchase and remortgage markets to continue throughout 2026.”
