The data points to a shift in product mix. UK Finance said the number of fixed-rate BTL mortgages outstanding reached 1.46 million, up 2% year-on-year. Over the same period, variable-rate balances continued to fall, down 9.8% to 466,000.
Pricing and affordability metrics moved in borrowers’ favour during the quarter. The average interest rate across new BTL loans was 4.77%, down eight basis points from Q3 2025 and 32 basis points lower than Q4 2024. In parallel, the average interest cover ratio (ICR) rose to 218%, compared with 201% a year earlier and 215% in the previous quarter.
Rental yields also strengthened. The average gross BTL rental yield across the UK was 7.18% in Q4 2025, up from 6.99% in Q4 2024.
Arrears eased on a quarterly basis, though possessions were higher than a year earlier. At the end of Q4 2025, there were 9,520 BTL mortgages in arrears of more than 2.5% of the outstanding balance, down 910 compared with the prior quarter. Possessions totalled 770 in the quarter, up from 700 in Q4 2024.
“The buy-to-let market overall was resilient at the end of last year, with the number of loans advanced around a fifth higher than at the same time the previous year.” said James Tatch (pictured right), head of analytics at UK Finance. “But, with growth concentrated in remortgage markets, new demand for BTL purchase remains fragile, falling slightly in Q4 compared with the same quarter a year ago.”