The average gross BTL rental yield across the UK rose to 7.21% in Q1, up from 6.93% in the same period a year earlier. The average interest rate on new BTL loans stood at 4.71%, six basis points lower than the previous quarter and 29 basis points below Q1 2025.
The average BTL interest cover ratio (ICR) improved to 221% from 204% in Q1 2025 and 218% in the prior quarter, reflecting the downward movement in rates.
Fixed-rate BTL mortgages outstanding reached 1.47 million, up 1.4% year-on-year. Variable-rate loans outstanding fell a further 9.5% to 453,000.
Number of BTL loans outstanding
UK quarterly stock, 2021 Q1 – 2026 Q1
Note: data series begin in 2021 Q1
Fixed rate Variable rate
Arrears greater than 2.5% of the outstanding balance stood at 8,960 at the end of Q1 2026, down 560 from the previous quarter. BTL possessions totalled 810 for the quarter, unchanged from Q1 2025.
“Although buy-to-let lending moderated from the stronger levels seen at the end of 2025, activity in the first quarter remained ahead of the same period last year, indicating that the market continues to move in the right direction where conditions are supportive,” commented Louisa Sedgwick (pictured right), managing director of mortgages at buy-to-let specialist Paragon Bank.