Buy-to-let lending reached £10.7bn in Q2 2026, up 25% year on year, as remortgages drove growth and new purchase loans eased against the previous quarter.
UK Finance figures show that lenders issued 58,051 new buy-to-let loans during the quarter, a 20.6% increase on Q2 2025. The total value of lending rose by 25% over the same period.
The annual increase partly reflects a weaker comparison with Q2 2025, when activity was subdued following changes to stamp duty in Q1. Increased remortgaging, as large numbers of fixed-rate mortgages reached the end of their terms, also contributed to the growth.
Buy-to-let lending driven by remortgages
Remortgages accounted for 39,631 loans in Q2 2026, with their number increasing by 17.6% and their value by 20.2% year on year. Activity edged up against the previous quarter, with 470 more remortgages completed.
Lenders issued 16,026 buy-to-let loans for new house purchases, up 23% by number and 27.9% by value compared with Q2 2025. However, purchase lending fell by 845 loans compared with Q1 2026.
The average gross buy-to-let rental yield stood at 7.27% in Q2 2026, almost unchanged from 7.26% a year earlier.
The average interest rate on new buy-to-let loans was 4.82%, 12 basis points higher than in Q1 2026 but 18 basis points lower than in Q2 2025.
The average buy-to-let interest cover ratio was 217% in Q2 2026, down from the previous quarter but above the 210% recorded a year earlier.
The number of outstanding fixed-rate buy-to-let mortgages fell by 0.7% year on year to 1.46 million. Variable-rate mortgages outstanding declined by 3% to 450,000.
At the end of Q2, 8,390 buy-to-let mortgages were in arrears of more than 2.5% of the outstanding balance. This was 570 fewer than in the previous quarter and a 25.6% annual decrease.
There were 630 buy-to-let mortgage possessions during the quarter, down 20.3% compared with Q2 2025.
“The latest figures point to a more resilient buy-to-let market, but the headline growth should be viewed in context,” said James Tatch, head of analytics at UK Finance.
“Activity in the same period last year was artificially low, as borrowers brought forward loans ahead of stamp duty changes, making the year-on-year increases look particularly strong. Compared with Q1 this year, the market appears more stable, with remortgaging edging up while lending for new purchases eased slightly. Looking ahead, higher borrowing costs are likely weighing down on buy-to-let demand, underpinning flatter lending growth across 2026."
Industry comments
“Remortgaging continues to be the story of 2026, accounting for approximately three quarters of completed buy-to-let loans during the period,” said Louisa Sedgwick, managing director of mortgages at Paragon Bank.
“We expect that trend to continue throughout the rest of this year and into 2027 as five-year loans written during the buoyant market of 2021 and 2022 mature.
“Overall lending has remained fairly robust considering the impact of the Iran War on mortgage pricing, with the value and number of loans for buy-to-let house purchase in line with the average quarterly level recorded since 2024, the period when the market entered recovery following the mini-Budget.”
Considering the long-term impact of new housing entering the private rented sector, she added: “The number of new purchases today is running approximately 5,000 below the average run rate per quarter since 2013; however, I suspect new stock entering the market is not keeping pace with exits.
“That creates long-term challenges for tenants through diminished choice and inflated rents, so policymakers need to be mindful of this growing imbalance between supply and demand as it considers next steps for housing policy.”
“Despite what has been a challenging landscape for the private rented sector throughout the year, it is extremely encouraging to see such a positive uplift in the volume of buy-to-let mortgage products being taken up,” said Kim Lidbury, president of ARLA Propertymark (Association of Residential Letting Agents).
“Overall, progress has been influenced by ongoing economic pressures and an evolving regulatory environment. Landlords have faced continued uncertainty around the cost of borrowing, affordability and the wider financial commitments associated with property investment. The implications of legislation such as the Renters’ Rights Act in England and the Housing (Scotland) Act have also added further complexity for those operating within the lettings sector.
“Maintaining access to competitive finance will be crucial in supporting responsible investment, helping existing landlords navigate the changing landscape and encouraging continued investment in the homes needed by tenants across the entire UK.”
