Falling mortgage rates are fueling a rise in buy-to-let investment and boosting investor confidence.

Recent analysis by Alexander Hall indicates that despite some landlords exiting the market, there has been a significant increase in new buy-to-let loan activity, driven by more competitive mortgage rates for investors.

Industry data reveals that 52,648 buy-to-let loans were issued in the final quarter of 2024, marking a 7.7% rise from the previous quarter and the highest level since early 2023. Additionally, the value of new buy-to-let lending reached a two-year peak of £9.6 billion during this period.

Most of this lending was due to existing landlords remortgaging, which accounted for 62.4% of new loans. However, 34.7% of the loans were for new rental property purchases, up from 33% the previous year.

Looking forward, Alexander Hall predicts that buy-to-let lending will remain robust in 2025, with new loans expected to consistently surpass 50,000 each quarter. Although a slight quarterly dip in volumes is anticipated, the value of new lending is projected to increase further to £9.7 billion per quarter.

This market resilience and growing investor interest are largely attributed to recent improvements in mortgage products. Further analysis from Alexander Hall shows that the average buy-to-let mortgage rate fell to 4.28% in Q4 2024, down from 4.40% the previous quarter and significantly lower than the 5.59% recorded in Q4 2023.

“While data from TwentyEA indicates some landlords are choosing to exit or streamline their portfolios ahead of the Renters’ Rights Bill, we’re also seeing a very positive trend among investors who are maintaining or expanding their holdings,” comments Stephanie Daley, Director of Partnerships at Alexander Hall.

“The number of buy-to-let loans issued and their overall value grew substantially throughout 2024, with further growth forecast for 2025. Additionally, rental listings have increased by 14%, highlighting ongoing activity in the sector.

“Much of this growth is being driven by remortgaging activity, but new investments are also on the rise. The improving mortgage landscape is clearly boosting investor confidence and encouraging renewed engagement in the market.”