The total value of new buy-to-let (BTL) lending reached £6.3bn in the fourth quarter of 2023, a fall of 55.4% on Q4 2022.

According to new figures published by UK Finance, the average gross BTL rental yield for the UK in Q4 2023 was 6.74%, compared with 5.85% in the same quarter a year earlier.

UK Finance reported the figures in its latest quarterly insight into BTL lending, which also highlights the lending trends of borrowers accessing the market.

The banking trade body reported that average interest rate across all new BTL loans in the UK increased to 5.7% in Q4 2023, up from 3.67% a year previously. As a result, the average BTL interest cover ratio (ICR) for the UK fell to 180%, compared with 238% in Q4 2022.

Elsewhere, UK Finance revealed that the number of BTL fixed rate mortgages outstanding in Q4 2023 totalled 1.37 million, 1.7% up on a year previously. By contrast, the number of variable rate loans outstanding fell by 12.7%, to a total of 620,000.

By the end of Q4 202,3 there were also 13,570 BTL mortgages in arrears that were greater than 2.5% of the outstanding balance. This figure was 123.9% higher than in the same quarter a year previously.

Furthermore, the UK Finance figures revealed there were 500 BTL mortgage possessions taken in Q4 2023, a figure up by 56.3% year-on-year.

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