Business mortgages, or buy-to-let (BTL) mortgages, are a loan sold to property investors, rather than to people who want to purchase a home to live in. In 2022, the five-year fixed mortgage interest rate for a BTL property in the United Kingdom was **** percent, which was an increase by **** percent compared to the same quarter of 2021. Conversely, the 10-year mortgage rate decreased from **** percent to *** percent. The vast majority of UK landlords had a fixed mortgage, with 5-year fix being the most popular mortgage term.

Business mortgages, or buy-to-let (BTL) mortgages, are a loan sold to property investors, rather than to people who want to purchase a home to live in. While flat, or fixed fees, are usually applied to vanilla products (standard BTL transactions of normal *** to ***** bedroom houses or *** to *** bedroom flats), percentage-based lending is focused on landlords with non-standard properties and more complex borrowing needs. As of the fourth quarter of 2019, the average flat rate fee was ***** British pounds. More than *** third of mortgage products had a flat rate fee.

Mortgage rates increased at a record pace in 2022, with the 10-year fixed mortgage rate doubling between March 2022 and December 2022. With inflation increasing, the Bank of England introduced several bank rate hikes, resulting in higher mortgage rates. In May 2025, the average 10-year fixed rate interest rate reached **** percent. As borrowing costs get higher, demand for housing is expected to decrease, leading to declining market sentiment and slower house price growth. How have the mortgage hikes affected the market? After surging in 2021, the number of residential properties sold declined in 2023, reaching just above *** million. Despite the number of transactions falling, this figure was higher than the period before the COVID-19 pandemic. The falling transaction volume also impacted mortgage borrowing. Between the first quarter of 2023 and the first quarter of 2024, the value of new mortgage loans fell year-on-year for five straight quarters in a row. How are higher mortgages affecting homebuyers? Homeowners with a mortgage loan usually lock in a fixed rate deal for two to ten years, meaning that after this period runs out, they need to renegotiate the terms of the loan. Many of the mortgages outstanding were taken out during the period of record-low mortgage rates and have since faced notable increases in their monthly repayment. About **** million homeowners are projected to see their deal expire by the end of 2026. About *** million of these loans are projected to experience a monthly payment increase of up to *** British pounds by 2026.

Business mortgages, or buy-to-let (BTL) mortgages, are a loan sold to property investors, rather than to people who want to purchase a home to live in. As of the second quarter of 2012, multi-unit freehold blocks (MUFB) saw the second-highest average loan size at over ******* British pounds. Nevertheless, this was a decrease from the third quarter in 2021, when the average loan size for this property type was close to ******* British pounds.

Business mortgages, or buy-to-let (BTL) mortgages, are a loan sold to property investors, rather than to people who want to purchase a home to live in. As of the second quarter of 2022, the loan-to-value (LTV) ratio of rental properties in the United Kingdom was between ** percent and ** percent, depending on the property type. Flats had the highest LTV ratio at ** percent, meaning that the amount of the loan for the purchase of a rental flat amounted to ** percent of the property value. In the same period, flats had the second-lowest average loan size from all property types.

In 2023, houses in multiple occupation (HMO) and flats in multi-unit blocks saw the highest property yield in the United Kingdom. In the second quarter of the year, the rental yield of HMOs was six percent. Business mortgages, or buy-to-let (BTL) mortgages, are a loan sold to property investors, rather than to people who want to purchase a home to live in.

Business mortgages, or buy-to-let (BTL) mortgages, are a loan sold to property investors, rather than to people who want to purchase a home to live in. While flat, or fixed fees, are usually applied to vanilla products (standard BTL transactions of normal two to three bedroom houses or one to two bedroom flats), percentage-based lending is focused on landlords with non-standard properties and more complex borrowing needs. As of the fourth quarter of 2019, ** percent of BTL mortgage products were percentage based.

For the past decade, buying a home in the UK has been more affordable than renting one, when only considering the monthly costs. The renting versus buying gap fluctuated during the period and in 2016, it reached its highest value of 131 British pounds. In 2023, the monthly costs for a first-time buyer were 1,231 British pounds, compared to 1,258 British pounds for renters. Rental growth vs house price growth Housing costs in the UK have been on an uprise, with both renting and buying a home increasingly unreachable. Though the monthly costs of buying have consistently been lower in the past decade, house price growth has been much stronger than rental growth since the beginning of the pandemic. Additionally, buyers have been affected by the aggressive mortgage rate hikes, making acquiring their first home even less affordable. Barriers to homeownership Buying a home is not straightforward. For younger (18-40) potential first-time buyers, there are a number of barriers. Approximately one in three first-time buyers point out that raising a deposit was the main obstacle. Other reasons stopping buyers were not being able to take out a mortgage on their current income and poor credit ratings. Unsurprisingly, the highest share of people who buy a home with a mortgage was in the age group of 45 to 55-year-olds.

The majority of landlords with debt in the United Kingdom (UK) had a portfolio loan-to-value (LTV) ratio below ** percent as of the second quarter of 2023. The LTV of about ** percent of landlords was below ** percent, while ** percent reported an LTV between ** and ** percent.

Business mortgages, or buy-to-let (BTL) mortgages, are a loan sold to property investors, rather than to people who want to purchase a home to live in. Landlords can apply for a BTL mortgage either as an individual or as a Limited Company. As of the fourth quarter of 2019, the average loan amount of both completed and newly submitted applications by Limited Companies was lower than the average loan to individuals.

Scotland had the highest interest cover ratio for buy-to-let properties in the UK in the third quarter of 2024. The average interest cover ratio in Scotland amounted to *** percent, while in London, it was *** percent. This means that landlords in Scotland had a much higher monthly rental income to total interest expenses on their outstanding mortgage than in London.

Mortgage rates in the United Kingdom have been on the rise since 2022, leading to an increased cost burden for buy-to-let landlords. In August 2023, the average mortgage cost amounted to ** percent of rental income. In the same month of 2022, this figure amounted to ** percent.

Business mortgages, or buy-to-let (BTL) mortgages, are a loan sold to property investors, rather than to people who want to purchase a home to live in. As of the fourth quarter of 2019, multi-unit freehold blocks (MUFB) saw the highest average property value at over ***** thousand British pounds.

The rental yield for buy-to-let properties varied widely across different property types in the United Kingdom. Business mortgages, or buy-to-let (BTL) mortgages, are a loan sold to property investors, rather than to people who want to purchase a home to live in. Semi-detached houses had the lowest rental yield at **** percent in the second quarter of 2022. Though a higher yield suggests profitability, it is also indicates higher risk.

The average cost of buying a property with a mortgage in Camden, London, was about twice as high as in Croydon in June 2024. Despite experiencing one of the highest declines in property prices in the past year, Kensington and Chelsea remained the most expensive borough for residential real estate. The average cost of buying a new residential dwelling with a mortgage is usually higher than the original asking price. The amount of the down payment, interest payments placed on the repayment of the loan, and other added costs on can amount to thousands of British pounds. Property prices in other cities in the UK Cambridge, Oxford, and Bristol were some of the other cities with costly housing markets. Despite the slowdown in the residential sector, many of the major cities in the UK continued to see house prices increase in 2023. Though the housing boom witnessed during the pandemic has come to an end, prices show little volatility, due to the high demand and chronic shortage of affordable housing. To buy or to rent? Buying has long been the better option for those who can afford it. Homebuyers can achieve monthly savings of several hundred British pounds, depending on the region. Nevertheless, the soaring mortgage rates and house prices in recent years have led to a narrowing gap between purchase and rental costs.

Since 2015, the gap between the cost of buying a home and renting has grown, with homeownership becoming increasingly less affordable. In the ***** ******* of 2024, the house price to rent ratio in the UK stood at *****. That meant that house price growth has outpaced rental growth by nearly ** percent between 2015 and 2024. The UK's house price to rent ratio was slightly below the average Euro area ratio. House price to income ratio in the UK Another indicator for housing affordability is the house price to income ratio, which is calculated by dividing nominal house prices by the nominal disposable income per head. The ratio saw an overall increase between 2015, which was the base year, and 2022. After that, the index declined, but remained close to the average for the Euro area. Is it more affordable to rent or buy? There are many things to be considered when comparing buying to renting, such as the ability to qualify for a mortgage and whether prospective homebuyers have sufficient savings for a deposit. Generally, purchasing a home is more affordable than renting one. However, the average monthly savings first-time buyers can achieve have been on the decline. In East of England, where house prices have increased rapidly over the past few years, it was cheaper to rent than to buy in 2022.

After a period of rapid increase, house price growth in the UK has moderated. In 2025, house prices are forecast to increase by ****percent. Between 2025 and 2029, the average house price growth is projected at *** percent. According to the source, home building is expected to increase slightly in this period, fueling home buying. On the other hand, higher borrowing costs despite recent easing of mortgage rates and affordability challenges may continue to suppress transaction activity. Historical house price growth in the UK House prices rose steadily between 2015 and 2020, despite minor fluctuations. In the following two years, prices soared, leading to the house price index jumping by about 20 percent. As the market stood in April 2025, the average price for a home stood at approximately ******* British pounds. Rents are expected to continue to grow According to another forecast, the prime residential market is also expected to see rental prices grow in the next five years. Growth is forecast to be stronger in 2025 and slow slightly until 2029. The rental market in London is expected to follow a similar trend, with Outer London slightly outperforming Central London.

Portugal, Canada, and the United States were the countries with the highest house price to income ratio in 2024. In all three countries, the index exceeded 130 index points, while the average for all OECD countries stood at 116.2 index points. The index measures the development of housing affordability and is calculated by dividing nominal house price by nominal disposable income per head, with 2015 set as a base year when the index amounted to 100. An index value of 120, for example, would mean that house price growth has outpaced income growth by 20 percent since 2015. How have house prices worldwide changed since the COVID-19 pandemic? House prices started to rise gradually after the global financial crisis (2007–2008), but this trend accelerated with the pandemic. The countries with advanced economies, which usually have mature housing markets, experienced stronger growth than countries with emerging economies. Real house price growth (accounting for inflation) peaked in 2022 and has since lost some of the gain. Although, many countries experienced a decline in house prices, the global house price index shows that property prices in 2023 were still substantially higher than before COVID-19. Renting vs. buying In the past, house prices have grown faster than rents. However, the home affordability has been declining notably, with a direct impact on rental prices. As people struggle to buy a property of their own, they often turn to rental accommodation. This has resulted in a growing demand for rental apartments and soaring rental prices.