Mortgage buy to let loans jumped by 47% to £9.6bn in Q4

Latest date from UK Finance has shown that landlord loans came in £9.6 billion over 52,648 cases in the final three months of last year, jumping 47.2% by value and 39.2% by case from a year ago.

Average gross buy-to-let rental yields edged up to 7% in the period, compared to 6.74% 12 months ago, adds the banking body’s BTL latest trends survey.

There were 12,610 landlord mortgages in arrears greater than 2.5% of the outstanding balance.  This was down by 390 from the previous quarter and 7% lower than the same quarter a year ago.

There were 700 BTL possessions in the period, unchanged from the previous quarter, but an increase of 29.6% on the same quarter a year previously.

The number of landlord fixed-rate mortgages outstanding in the period was 1.43 million, 4.4% up on a year ago.  By contrast, the number of variable rate loans outstanding fell by 15.9% to 518,000.

Heather Hancock, Head of Credit & Operations at Black & White Bridging said “The latest UK Finance figures paint a more complex picture of the buy-to-let market than headlines might suggest. While it’s true that buy-to-let 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.

“The rise in rental yields and improved interest cover ratios indicate that landlords who can weather the storm are still seeing opportunities, but the fundamental challenges remain. Higher taxation, tighter regulation, and affordability constraints continue to squeeze out smaller landlords, making buy-to-let increasingly the domain of those with significant capital reserves.

“We also can’t ignore the fact that while lending volumes are up, possessions have also increased by nearly 30% year-on-year. This suggests a market that remains under significant pressure, with some landlords exiting while others with deeper pockets move in. The market may not be collapsing, but it is undeniably shifting towards a more consolidated landscape where only the most well-resourced investors can thrive.”