Landlords are increasingly refinancing and restructuring rather than selling properties, as lenders report falling mortgage arrears and a surge in buy-to-let remortgaging.

UK Finance’s Buy-to-let Mortgage Market Update for Q1 reports that 58,272 new buy-to-let loans were advanced, worth £10.8 billion - up 3.2% on a year ago, and 7% by value. BTL remortgages increased 11.1% to 39,160, while the number of loans for house purchases dropped by 14.9% to 16,871.

“This points to landlords actively refinancing as they respond to broader affordability considerations and manage their portfolios, including supporting longer-term plans such as expansion and investment in existing properties,” explains Louisa Sedgwick, (pictured right) managing director of mortgages at Paragon Bank.

The 11.1% surge highlights a proactive landlord community, says Raheel Butt, head of BTL underwriting at MT Finance, who adds: “Savvy investors are taking control and optimising their existing portfolios.”

Balance

At the end of Q1 there were 8,960 buy-to-let mortgages in arrears greater than 2.5% of the outstanding balance, down 560 from the previous quarter, while the number of buy-to-let mortgage possessions taken – 810 – was unchanged.

“Crucially, the 6% quarter-on-quarter drop in mortgages in arrears, bringing the total down to just 0.47% of the market, is a fantastic indicator of stability,” says Butt. “It shows that professional landlords are managing their leverage exceptionally well.”

Together mortgages reports that there has been a shift from property-by-property financing to “portfolio level thinking”. Chief strategy officer Russell Anderson says it’s witnessing a shift from individual transactions to more structured finance that supports landlords at a portfolio level.

Latest

“Transferring individual loans to multi-property propositions is one of the latest ways that Together has identified as a new niche to support investors and their property ambitions,” says Anderson. “It’s a simple concept but through removing the pressures of fragmented borrowing via a centralised loan enables more efficient leverage of equity, greater flexibility and reduces refinancing pressure.”  

UK Finance reports that the average interest rate across all new buy-to-let loans was 4.71% in Q1 which was 6 basis points lower than in the previous quarter, and 29 basis points lower than in the same quarter last year.

According to Moneyfacts, fixed mortgage rates have recorded their biggest monthly reductions since October 2024.

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