Average buy-to-let (BTL) rental yields across England and Wales increased year-on-year in the second quarter, although most regions recorded a quarterly decline, revealed the latest data from Fleet Mortgages.

Fleet's latest Rental Barometer showed the average rental yield rose to 7.8% in Q2 2026 from 7.5% a year earlier, but slipped from 8.1% in Q1.

The North East remained the highest-yielding region at 9.2%, despite a 0.6% quarterly fall, while the North West moved into second place with an 8.8% yield. Higher-yielding regions in the North and Midlands continued to outperform southern England.

According to the firm, mortgage pricing came under pressure early in the quarter as geopolitical tensions surrounding the conflict in Iran pushed funding costs higher, but conditions improved later in Q2 as swap rates eased, allowing lenders to cut rates and reintroduce products.

The lender also reported stronger market activity, with purchase lending rising to 36% of business from 33% in Q1.

Portfolio landlords remained dominant, with borrowers holding an average of 16 investment properties compared with 10 a year earlier, while limited company borrowing accounted for 78% of all lending.

The share of applications received from landlords with six to 14 properties grew from 26% in Q1 to 30% in Q2, while landlords with 15 or more properties accounted for 26% of applications.

At the same time, first-time landlord applications represented 9% of all business, slightly down on the 11% recorded in the first three months of the year.

Steve Cox, chief commercial officer at Fleet Mortgages, said: "Q2 for the buy-to-let, and wider, mortgage market has effectively been a ‘flip reverse’ of Q1. While it's important not to assume this calmer environment will continue indefinitely, the market is undoubtedly ending the quarter in a stronger position than many expected a few months ago."

He added: "Our figures also continue to show professional landlords remain active. Purchase activity has picked up, portfolio landlords continue to expand where opportunities exist and limited company borrowing remains the preferred route for most investors. Those are all positive indicators for the underlying strength of the buy-to-let sector."

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