Buy-to-Let Market Trends and Mortgage Rates 2025

What's happening to the buy-to-let market is in a muddle as trusted sources report contrary points of view.

The latest data from mortgage lender trade body UK Finance shows a massive jump in buy-to-let lending - and in landlord mortgage repossessions.

Meanwhile, the government's independent Office for National Statistics (ONS) points to slowing rent rises as fewer private rented homes come to market.

This view is backed by the letting agent trade body, the Royal Institution of Chartered Surveyors (RICS), which says members are experiencing an influx of tenants chasing a declining number of properties available to rent.

However, UK Finance's analysis of buy-to-let mortgage lending in the first quarter of the year reveals 58,347 new buy-to-let loans worth £10.5 billion were advanced in the UK. Breaking down the total, landlords borrowed £3.4 billion to buy new homes to rent and £6.8 billion for remortgaging rental properties.

Serious arrears down

This is a massive increase of 38.6 per cent in the number of loans and 46.8 per cent in value compared with the same period a year earlier.

At the end of Q1 2025,11,830 buy-to-let mortgages were in serious arrears greater than 2.5 per cent of the outstanding balance. This was 780 mortgages from those in serious arrears in Q4 2024.

Lenders repossessed 810 buy-to-let homes in Q1 2025, up 28.6 per cent on the same quarter a year previously.

"Landlords are paying an average mortgage interest rate of 4.99 per cent, which is 10 basis points lower than in the previous quarter and 41 basis points lower than in the same quarter of 2024," said a UK Finance spokesperson.

Buy-to-let revival as rates drop

UK Finance calculates gross rental yield for the first three months of this year as 6.94 per cent, up from 6.88 per cent in the first quarter of last year.

Nathan Emerson, head of Propertymark, another letting agent trade body, said:

Hopefully, we are witnessing a wider-scale revival in buy-to-let lending. This trend is likely encouraged by lower interest rates on buy-to-let loans than in the same quarter last year.

These numbers demonstrate that more competitive interest rates are attracting more people to the buy-to-let market.

However, with mortgage possessions up this quarter from the same quarter a year previously, these figures also highlight there are still significant affordability issues for borrowers.

Best buy to let rates

These are the current best buy-to-let mortgage rates from the market monitor Moneyfacts.