The number of buy-to-let (BTL) mortgage loans advanced in the UK jumped by 39.2% in the last quarter of 2024 to 52,648, UK Finance has revealed.

In its latest BTL lending report, the trade association found that the value of these loans reached £9.6bn in this period, which is an annual increase of 47.2%.

UK Finance revealed that the average gross BTL rental yield was up by 7% in Q4 2024, compared to 6.7% in the same quarter in 2023.

The banking body said BTL market appeared to reflect the drop in the Bank of England’s base rate, as the average interest rate across new BTL loans reached 5.09%, which is a quarter-on-quarter drop of 0.13% and an annual fall of 0.61%.

UK Finance said the average BTL interest cover ratio for the UK in Q4 2024 was 201%, compared to 190% in Q1 2024, which it stated also reflected the "downwards movement in interest rates".

The trade body also revealed that the number of BTL fixed rate mortgages outstanding in Q4 2024 was 1.43 million, which is an increase of 4.4% year-on-year.

Furthermore, 12,610 BTL mortgages were in arrears of greater than 2.5% of the outstanding balance, which is an annual decline of 7%, while the number of BTL mortgage possessions increased by 29.6% to 700 in the quarter.

Commercial director of mortgages at Paragon Bank, Russell Anderson, commented: "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."

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