Buy-to-let mortgage lending jumped by more than 20% in the second quarter of 2026, but the figures mask a more subdued picture of landlord investment. New data from UK Finance shows lenders issued 58,051 buy-to-let loans worth £10.7bn between April and June. That represents a 20.6% increase in loan numbers and a 25% rise in value compared with the same period last year.
Annual growth reflects weak 2025
However, much of the annual growth reflects unusually weak lending in 2025. Stamp duty changes had prompted borrowers to bring forward transactions, distorting subsequent comparisons. Meanwhile, remortgaging continued to account for the majority of buy-to-let lending.
Landlord purchases slip despite annual growth
Lenders issued 16,026 mortgages for new buy-to-let purchases during the quarter. Although that was 23% higher than a year earlier, it represented a decline of 845 loans compared with Q1 2026. By contrast, remortgaging edged higher. There were 39,631 buy-to-let remortgages, up 17.6% annually and 470 loans above the previous quarter. The figures suggest much of the lending activity reflects existing landlords refinancing rather than expanding their portfolios.
Rental yields hold steady
Average gross buy-to-let rental yields remained largely unchanged at 7.27%, compared with 7.26% a year earlier. However, borrowing costs increased during the quarter. The average interest rate on new buy-to-let loans reached 4.82%, up from 4.70% in Q1. Nevertheless, rates remained 0.18 percentage points below their level a year earlier. Meanwhile, the average interest cover ratio stood at 217%, compared with 210% in Q2 2025.
Arrears and possessions fall
There was further improvement in buy-to-let mortgage arrears. At the end of June, 8,390 mortgages had arrears exceeding 2.5% of their outstanding balances. That was 570 fewer than the previous quarter and 25.6% below the same period last year. Meanwhile, lenders recorded 630 buy-to-let mortgage possessions during Q2, down 20.3% annually. The number of outstanding fixed-rate buy-to-let mortgages fell 0.7% to 1.46 million. Variable-rate mortgages also declined, falling 3% to 450,000.
James Tatch, head of analytics at UK Finance, said the annual lending figures needed to be viewed in context. “The latest figures point to a more resilient buy-to-let market, but the headline growth should be viewed in context.” He explained that lending in Q2 2025 had been unusually weak following changes to stamp duty. As a result, annual comparisons make the recovery appear stronger than underlying activity suggests. Tatch added: “Compared with Q1 this year, the market appears more stable, with remortgaging edging up while lending for new purchases eased slightly.” He warned that higher borrowing costs could continue to constrain demand. For letting agents, the figures suggest existing landlords remain active in managing their borrowing. However, there is less evidence of a sustained increase in purchases that would expand rental housing supply.
