UK buy-to-let (BTL) lending rose 25% in value year-on-year in the second quarter of 2026, according to figures from UK Finance.

The trade body said there were 58,051 new BTL loans advanced worth a combined £10.7bn in Q2.

The number of new BTL loans increased by 20.6% compared with the same quarter in 2025, while the total value advanced also recorded strong annual growth.

The average gross rental yield across the UK stood at 7.27% in Q2 2026, remaining broadly stable compared with 7.26% in the same quarter a year earlier.

The average interest rate on new buy-to-let loans was 4.82%, up 12bps from the previous quarter but down 18bps year on year.

Reflecting movements in interest rates, the average BTL interest cover ratio (ICR) stood at 217%. This was higher than the 210% recorded in Q2 2025, although down from 221% in the first quarter of 2026.

The number of outstanding fixed-rate BTL mortgages fell by 0.7% year-on-year to 1.46m. Variable-rate loans also declined, dropping by a further 3% to 450,000.

Meanwhile, the number of BTL mortgages in arrears of more than 2.5% of the outstanding balance fell by 570 compared with the previous quarter, reaching 8,390 at the end of Q2 2026.

Mortgage possessions also declined, with 630 BTL properties repossessed during the quarter, a 20.3% decrease compared with the same period a year earlier.

Paragon Bank managing director of mortgages Louisa Sedgwick said: “Remortgaging continues to be the story of 2026, accounting for approximately three quarters of completed buy-to-let loans during the period. We expect that trend to continue throughout the rest of this year and into 2027 as five-year loans written during the buoyant market of 2021 and 2022 mature.

“Overall lending has remained fairly robust considering the impact of the Iran war on mortgaging pricing, with the value and number of loans for buy-to-let house purchase in line with the average quarterly level recorded since 2024, the period when the market entered recovery following the mini-Budget.”