The buy-to-let mortgage sector is showing clear signs of resurgence following a reform to affordability stress testing rules earlier this year, according to new research from mortgage adviser Alexander Hall.
In a move widely welcomed by lenders and landlords, the Bank of England revised its notional interest rate guidance in March 2025. The changes removed the requirement for borrowers taking out fixed-rate products of less than five years to be assessed using the lender’s Standard Variable Rate plus 1%, a rule that had long been viewed as overly restrictive for professional investors.
The result has been a marked improvement in both the accessibility and competitiveness of buy-to-let mortgage products. Lenders now have greater flexibility to assess affordability based on the actual terms of the product being offered, rather than applying a blanket stress rate.
PRODUCT EXPANSION
New figures from Alexander Hall show that the number of buy-to-let mortgage products available between January and June 2025 climbed to 2,752 – a 41.9% increase compared with the same period in 2024. This represents the largest year-on-year rise across all borrower groups.
By contrast, product availability for first-time buyers increased by 16.2%, while remortgage and home mover products rose by just 3.2% and 2.0% respectively.
Average rates in the buy-to-let space have also improved notably. The average 2-year fixed rate at 75% loan-to-value has fallen from 4.78% in May 2023 to 3.93% in May 2025, a reduction of 0.85 percentage points.
On a year-by-year basis, the average rate has declined by 0.61 percentage points.
Some lenders have gone even further, with recent examples of sub-3% products emerging for certain buy-to-let scenarios.
The changes are expected to be particularly beneficial for portfolio landlords and seasoned investors, many of whom had previously faced significant hurdles in meeting affordability requirements.
With rental demand continuing to outstrip supply in many parts of the UK, the relaxation of stress test thresholds is likely to encourage more landlords to expand their holdings or re-enter the market altogether.
Richard Merret, managing director of Alexander Hall, said: “The easing of stress testing rules is an important step forward for the buy-to-let sector. We’ve already seen a noticeable improvement in product availability and borrowing affordability, helping landlords better manage their portfolios and capitalise on new opportunities.
“At a time when the rental market is under pressure from high demand and low supply, these changes offer a much-needed boost to investor confidence and market fluidity.”
