The number of BTL loans advanced in the UK surged by 39% in Q4 2024, according to UK Finance.
During this time 52,648 new BTL loans were advanced, 39% more than the same quarter in 2024, with a total value of £9.6bn lent.
In terms of value, this means 47% more was lent than at the end of 2023.
Rental yields were also up in the fourth quarter at 7%, higher than the 6.74% recorded in 2023.
However, interest rates were slightly lower during this period.
In Q4 the average interest rate across all new BTL loans was 5.09%. This was 13bps lower than the third quarter of 2024, and 61bps lower than at the end of 2023.
Arrears were also down at the end of 2024.
In the fourth quarter, there were 12,610 BTL mortgages in arrears of greater than 2.5% of their outstanding balance.
This was 390 fewer than the preceding quarter and 7% lower than at the end of 2023.
Commenting, Paragon Bank commercial director of mortgages Russell Anderson said this data showed that landlords were “astutely” managing their businesses and borrowing and refinancing proactively to manage debt while improving 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,” added Russell.
“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.”
Heather Hancock, head of credit and operations at Black & White Bridging, also said: "The latest UK Finance figures paint a more complex picture of the BTL market than headlines might suggest.
“While it’s true that BTL lending saw a notable increase compared to the previous year, this growth is likely being driven by professional and institutional landlords rather than the smaller investors who have historically formed the backbone of the sector.”
