A total £10.5bn worth of new buy-to-let (BTL) loans were advanced in the first quarter of 2025, a figure up 46.8% on Q1 last year, new UK Finance data has revealed.

This was made up 58,347 new BTL loans, a total which was 38.6% higher than last year.

UK Finance also reported that the average gross BTL rental yield for the UK in Q1 was 6.94%, compared with 6.88% in Q1 2024. The average interest rate across all new BTL loans in the UK was 4.99%, a level 10 basis points lower than in the previous quarter, and 41 basis points lower than in the same quarter of 2024.

The banking trade body’s latest data also showed that the number of BTL fixed rate mortgages outstanding in Q1 2025 was 1.44 million, 4.99% up on a year previously. By contrast, the number of variable rate loans outstanding fell by 15.8%, to 500,000.

At the end of Q1, UK Finance also revealed that there were 11,830 BTL mortgages in arrears greater than 2.5% of the outstanding balance. This was down 780 from the previous quarter. There were also 810 BTL mortgage possessions taken in the quarter, which was up 28.6% on the same quarter last year.

Managing director of mortgages at Paragon Bank, Louisa Sedgwick, commented: “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.”

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