Buy-to-Let Lending Grows in Q1 2026

Landlords looking to optimise their portfolios or lock in a better mortgage rate should consider acting soon for the best deals, according to the latest buy-to-let update from lenders.

The buy-to-let market is growing more professional, with active landlords taking decisive steps to secure their finances.

Total lending is up: Landlords took out 58,272 new loans worth £10.8 billion in Q1 2026 - a 3.26% increase in volume and a 7.02% increase in value compared to the same period last year.
The remortgage boom: The real engine of this growth was refinancing. Remortgaging surged by 11.1% year-on-year, with 39,160 loans.
New purchases cool down: Meanwhile, loans for new house purchases fell 14.9% to 16,871. However, this varied wildly by region: purchase volumes jumped 20.6% in Wales, thanks to competitive rental yields.

Why the market looks brighter for landlords

Three major trends in the lender data from trade group UK Finance highlight why the financial outlook for landlords is strengthening:

1. Rental yields climbing

Average gross rental yields rose to 7.21% in Q1 2026, up from 6.93% a year earlier. Strong demand from tenants continues to bolster income across rental portfolios.

2. Borrowing costs eased

The average interest rate on new loans was 4.71%. While still higher than historic lows, this is 0.29% lower than Q1 2025, providing much-needed breathing room.

3. Affordability metrics are stronger

Reflecting the drop in interest rates, the average Interest Cover Ratio (ICR)—the measure lenders use to see how easily rental income covers mortgage payments—improved to 221% (up from 204% in Q1 2025). This makes passing lender stress tests significantly easier.

Despite the broader economic pressures, the sector is in excellent shape. Landlord mortgages in arrears (over 2.5% of the balance) actually fell by 560 cases to 8,960 at the end of the quarter.

Best buy landlord mortgages

Product Type	Lender	Rate	APRC	Max LTV	No. of products
Fixed rates
2-year fixed	CHL	2.70%	8.70%	75%	1482
3-year fixed	BM Solutions	4.89%	6.30%	90%	71
5-year fixed	The Mortgage Works	3.99%	6.90%	65%	1613
Maximum loan-to-value
60% LTV	CHL	2.70%	8.70%	75%	3547
75% LTV	CHL	2.70%	8.70%	75%	2485
80% LTV	Molo Finance	2.95%	6.70%	80%	555
Variable rates
Discounted variable	Stafford Building Society	2.90%	7.20%	70%	146
All variable	Stafford Building Society	2.90%	7.20%	70%	146
Specialist buy-to-let mortgages
First-time landlord	NatWest	4.47%	6.50%	60%	10
Limited company	Molo Finance	3.85%		75%	10
All buy-to-let		2.70%	8.70%	75%

Representative example

£170,000 mortgage over 25 years initially at 3.04% fixed for 24 months, reverting to a tracker rate of 8.65% variable for the term. 24 monthly payments of £430.67 and 276 monthly payments of £1,225.42. Total amount payable is £530,872.00, including the loan amount, interest of £348,552, valuation fees of £315, and product fees of £11,900. The overall cost for comparison is 8.7% APRC representative.

Source: Moneyfacts

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