There were 49,590 new buy-to-let (BTL) loans advanced in the UK, worth £8.8bn in the second quarter of the year, data from UK Finance reveals.

The figures show this is relatively flat compared with the same quarter in the previous year, down 2.6% by number, 0.2% by value.

The average gross BTL rental yield for the UK in Q2 2025 was 7.26%, compared with 6.9% in the same quarter in the previous year.

The average interest rate across all new BTL loans in the UK was 5.0% in Q2 2025. This was 2 basis points higher than in the previous quarter, and 19 basis points lower than in the same quarter of 2024.

Reflecting the downwards movement in interest rates, the average BTL interest cover ratio (ICR) for the UK in Q2 2025 was 210%, up from 192% in Q2 2024 and 201 in the previous quarter.

The number of BTL fixed rate mortgages outstanding in Q2 2025 was 1.47 million, 5.5% up on a year previously.

By contrast, the number of variable rate loans outstanding fell by 18.0% to 463,000.

At the end of Q2 2025 there were 11,270 BTL mortgages in arrears greater than 2.5% of the outstanding balance. This was down 560 from the previous quarter.

There were 790 BTL mortgage possessions taken in Q2 2025, up 11.3% on the same quarter a year previously.

Commenting on the UK Finance figures, Paragon Bank managing director of mortgage Louisa Sedgwick says: “Although mortgage completions were lower than the first quarter of the year and when compared to the same period in 2024, they must be viewed in the context of the market distortion brought about by changes to Stamp Duty at the end of March.”

“Landlords brought forward transactions to benefit from the higher Stamp Duty thresholds and lower their tax exposure.”

“There were over 9,500 mortgaged house purchase completions in March, compared to fewer than 3,500 in April, highlighting the impact of changes to Stamp Duty on the normal flow of business. However, market activity has been positively building back up throughout the second quarter and into the third.”

“More broadly, it’s also interesting to note an uplift in the value of outstanding balances. These have been increasing since the second half of last year and now sit above £300 billion, something not seen since the second quarter of 2023.”

Propertymark Arla president Mgan Eighteen adds: “These mixed results highlight the ongoing uncertainty facing the buy-to-let market, driven by wider economic pressures.” “Inflation remains stubbornly high, interest rates are still elevated compared to pre-pandemic levels, and Stamp Duty thresholds are less favourable than in the same period last year.”

“Combined with the anticipation surrounding the upcoming Autumn Budget, many investors are choosing to hold off on decisions until there is greater clarity.”

“That said, there are still reasons for cautious optimism. Some areas of the country are seeing improved rental yields compared to this time last year, and the number of buy-to-let mortgages in arrears has declined since the previous quarter.”

“We hope to see economic conditions stabilise in the near future to support a stronger and more confident buy-to-let sector.”