Landlords are moving more of their borrowing onto interest-only deals as higher mortgage rates return, with new figures from Hamptons showing a sharp jump in the share of buy-to-let loans written on that basis this month.
Hamptons said 78.4 percent of new buy-to-let lending on purchases was agreed on an interest-only basis in early April, up from 71.1 percent at the start of 2026. The shift came as the share of new buy-to-let mortgages priced at 5 percent or above climbed to 43 percent, compared with just 8 percent in January.
For landlords, this is less a sign of confidence than a sign of adaptation. Interest-only borrowing cuts monthly costs quickly, but it also shows how much tighter the margin has become for investors who still rely on debt to make new purchases stack up.
Higher rates are changing how landlords borrow
Hamptons said a typical repayment mortgage on a landlord purchase in April 2026 would cost £828 a month, compared with £580 on an interest-only deal. That £248 gap is now the widest since September 2022.
That matters because a growing number of landlords no longer have much room to absorb mortgage cost shocks through rent alone. Mortgage stress tests still require deals to work at higher assumed rates, and lenders remain more cautious than they were before the market reset of 2022. For property investors looking at new purchases, lower monthly payments often matter more than the long-term appeal of paying debt down faster.
Hamptons also found that around 40 percent of landlords remortgaging onto interest-only products this year have injected cash to reduce their loan balance. On average, they paid in £30,100, cutting the mortgage by 18.1 percent. That is a useful warning against reading the headline as simple product preference. In many cases, landlords are not choosing interest-only because it is attractive in itself. They are choosing it because it is one of the few ways to keep a refinance or purchase workable.
This follows Landlord Knowledge’s earlier report on mortgage deals vanishing in eight days as landlord options tightened, which showed how quickly pricing had moved against borrowers as lenders repriced. The latest Hamptons figures suggest that trend is already changing landlord behaviour, not just lender product sheets.
Two-year fixes regain ground as landlords stay cautious
Another sign of caution is the move back towards shorter fixed-rate deals. Hamptons said two-year fixes now account for 48.3 percent of new landlord lending, ahead of five-year fixes at 33 percent. That points to a market still hoping for better refinancing conditions later, even if current pricing remains awkward.
Landlord Knowledge has already tracked how remortgaging has been doing more of the heavy lifting in buy-to-let lending. The latest Hamptons data adds another layer: landlords are not only refinancing more, but reshaping debt structures to get through a higher-rate period.
There is one offsetting positive. Hamptons said rents on newly let homes in Great Britain rose 1 percent annually in March, up from 0.5 percent in February, while tenant demand increased 24 percent year on year. Inner London was a major driver, with rents there up 4.1 percent. But supply is still thin, with 1 percent fewer homes available to rent than a year earlier and 33 percent fewer than in March 2019.
For landlords, stronger tenant demand may help support income, but it does not remove the financing problem. The practical risk is that more investors will keep buying only if they can reduce monthly costs through interest-only terms, larger deposits or both. That may protect cash flow in the short term, but it also leaves less room for overpaying debt and raises the importance of having a clear exit or repayment plan.
Landlords refinancing at higher rates are also operating in a market where lenders remain under pressure to show what support is available through the government’s Mortgage Charter framework.
What this means for landlords
- If you’re buying with finance: check whether the deal still works on repayment terms before defaulting to interest-only.
- If you’re remortgaging this spring: expect many lenders to test affordability hard unless you add cash or accept a shorter fix.
- Watch for: whether falling swap rates or lender competition revive five-year fixes later this year.
- Bottom line: interest-only is becoming a defensive tool for landlords, not just a tax-efficient preference.
Editor’s view
Interest-only borrowing is back for a simple reason: too many deals do not work cleanly on repayment terms at today’s rates. That keeps landlords in the market, but it also shows how dependent new investment remains on lower monthly payments rather than genuine financing comfort.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 20 April 2026
Sources: Hamptons
Related reading: Mortgage deals vanish in eight days as landlord options tighten
