BTL lending volumes surged by 38.6% in the first quarter of 2025 compared to the preceding period, according to UK Finance.
This was due to 58,347 new BTL loans being advanced during this time, worth £10.5bn in total.
Rental yields were also up, with the average rental yield increasing to 6.94% from 6.88% in the same period in 2024.
Supporting this has been rate cuts throughout the industry with lenders becoming even more competitive for business.
During the quarter, the average interest rate for BTL loans was 4.99% which was 10bps lower than the previous quarter.
This was also 41bps lower than the first quarter of 2024.
Arrears were also down during this time.
Though there were 11,830 BTL mortgages in arrears by the end of the first quarter, this amount was down by 780 from the preceding period.
That said, there were 810 BTL mortgage possessions taken in the first quarter, a 28.6% increase from the same period in 2024.
Commenting on the figures, Paragon Bank managing director mortgages Louisa Sedgwick (pictured above) took confidence from the market conditions it suggests.
“This shows that with the right market conditions landlords will invest,” said Louisa.
“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.”
