New figures from UK Finance, the mortgage companies’ trade body, suggest a surprisingly optimistic picture in terms of lending.

In Q1 2025 there were 58,347 new buy to let loans advanced in the UK, worth £10.5 billion. This was up 38.6% by number and 46.8% by value, compared with the same quarter in the previous year.

The average gross BTL rental yield for the UK in Q1 2025 was 6.94%, compared with 6.88% in the same quarter in the previous year.

The average interest rate across all new BTL loans in the UK was 4.99 per cent in Q1 2025. This was 10 basis points lower than in the previous quarter, and 41 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 Q1 2025 was 202%, up from 190% in Q1 2024 and unchanged from the previous quarter.

The number of BTL fixed rate mortgages outstanding in Q1 2025 was 1.44m, some 4.99% up on a year previously. In contrast, the number of variable rate loans outstanding fell by 15.8% to 500,000.

At the end of Q1 2025 there were 11,830 BTL mortgages in arrears greater than 2.5% of the outstanding balance. This was down 780 from the previous quarter.

But there were 810 BTL mortgage possessions taken in Q1 2025, up 28.6% on the same quarter a year previously.