Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Strategy. Read the original article for full details.

Buy-to-let Lending Rises in Q1 2026 as Remortgaging Drives Growth

Buy-to-let lending increased in the first quarter of 2026, according to the latest figures from UK Finance. The growth was mainly driven by a rise in remortgaging activity across the UK.

A total of 58,272 new buy-to-let loans were advanced between January and March 2026, with a total value of £10.8 billion. This represented a 3.3% increase in lending volumes compared to the same period in 2025, while the total value of lending rose by 7%.

Remortgaging accounted for much of the growth, with 39,160 buy-to-let remortgage loans completed during the quarter. This was an increase of 11.1% year-on-year. In contrast, lending for buy-to-let property purchases fell by 14.9% to 16,871 loans.

Regional Trends and Rental Yields

Regional trends varied across the UK. Buy-to-let house purchase lending increased by 22.6% in Scotland and 20.6% in Wales, supported by strong rental yields and favourable interest cover ratios. However, house purchase activity declined in England, where lending fell 18.7%, and in Northern Ireland, where it was down 11.8%.

The average gross buy-to-let rental yield across the UK rose to 7.21%, up from 6.93% in the first quarter of 2025. Borrowing costs also eased, with the average interest rate on new buy-to-let loans falling to 4.71%. This was six basis points lower than the previous quarter and 29 basis points below the level recorded a year earlier.

Affordability and Mortgage Types

Lower interest rates improved affordability metrics. The average buy-to-let interest cover ratio (ICR) increased to 221% in Q1 2026, up from 204% a year earlier and 218% in the previous quarter.

Fixed-rate mortgages continued to dominate the sector. At the end of the quarter, there were 1.47 million fixed-rate buy-to-let mortgages outstanding, an increase of 1.4% compared with a year earlier. The number of outstanding variable-rate loans fell by 9.5% to 453,000.

Arrears and Possessions

Arrears showed signs of improvement. By the end of March, 8,960 buy-to-let mortgages were in arrears of more than 2.5% of the outstanding balance, down by 560 cases from the previous quarter. The number of buy-to-let mortgage possessions remained unchanged year-on-year, with 810 properties repossessed during the first quarter of 2026.