UK Finance has released its quarterly buy-to-let update for Q4 2024, showing a rise in new buy-to-let lending on both a quarterly and annual basis.
The figures show that there were 52,648 new buy-to-let loans advanced in Q4, worth £9.6 billion. This was up 39.2% by volume and 47.2% by value compared with the same quarter in the previous year.
The average interest rate across all new buy-to-let loans in the UK was 5.09% in Q4 - 0.13 basis points lower than in the previous quarter and 0.61 basis points lower than in the same quarter of 2023.
Reflecting the downwards movement in interest rates, the average buy-to-let interest cover ratio (ICR) was 201%, up from 190% in Q1 2024 and 21 basis points higher than a year previously.
The average gross buy-to-let rental yield for the UK in Q4 was 7%, compared with 6.74% in the same quarter in the previous year.
The number of buy-to-let fixed rate mortgages outstanding in Q4 2024 was 1.43 million, 4.4% up on a year previously. In contrast, the number of variable rate loans outstanding fell by 15.9% to 518,000.
At the end of Q4 there were 12,610 buy-to-let mortgages in arrears greater than 2.5% of the outstanding balance. This was down 390 from the previous quarter and 7% lower than in Q4 2023.
There were 700 buy-to-let mortgage possessions taken in Q4 2024, unchanged from the previous quarter, but an increase of 29.6% on Q4 2023.
Russell Anderson, commercial director of mortgages at Paragon Bank, said: “Figures published today by industry body UK Finance reveal a resurgent buy-to-let market throughout 2024, with strong growth in both purchase and remortgage activity.
“The data supports our view that landlords are astutely managing their lettings businesses, borrowing to invest in higher yielding properties or refinancing to proactively manage debt across portfolios and improve privately rented housing stock.
“While encouraging, this increase is against a low base in 2023 and there continues to be an acute supply demand imbalance in the private rented sector, underpinning rental inflation. More investment is needed into the sector to meet forecast levels of demand, so we would hope to see the momentum of last year continuing as the market recovers.”
