Buy-to-let lending drops 55% in Q4 while arrears rise 124%: UK Finance

The value of new buy-to-let lending for the UK in Q4 2023 was £6.3 billion, down 55.4% compared with the same quarter in the previous year, according to the latest figures from UK Finance.

The average interest rate across all new buy-to-let loans in the UK rose to 5.7% in Q4 2023, up from 3.67% a year previously.

As a result, the average buy-to-let interest cover ratio (ICR) for the UK in Q4 2023 fell to 180%, compared with 238% a year previously.

The number of buy-to-let fixed rate mortgages outstanding in Q4 2023 was 1.37 million, 1.7% up on a year previously. In contrast, the number of variable rate loans outstanding fell by 12.7% to 0.62 million.

The average gross buy-to-let rental yield for the UK in Q4 2023 was 6.74%, compared with 5.85% in the same quarter in 2022.

At the end of 2023 there were 13,570 buy-to-let mortgages in arrears greater than 2.5% of the outstanding balance, 123.9% higher than in the same quarter a year previously.

There were also 500 buy-to-let mortgage possessions taken in Q4, up 56.3% on the same quarter a year previously.