A buoyant buy-to-let market has led to an increase in competition from lenders, meaning better deals and lower rates on offer, according to Moneyfacts.

The financial information provider said that the popularity of buy-to-let is soaring because of high rents and tenant demand. This has led to a raft of new deals from lenders keen to attract more borrowers. And the result is  lower rates of interest plus more attractive mortgage packages, including deals with no arrangement fee to pay.

The average two-year fixed rate on a buy-to-let mortgage has fallen dramatically to 3.26% from 5.23% in four years, while five-year fixes have dropped from 6.12% to 4.06%.

The number of mortgages available with no arrangement fee has more than doubled in the last year alone to 130 mortgages. Four years ago there were just 16 fee-free buy-to-let deals available.

Charlotte Nelson, finance expert at Moneyfacts.co.uk, said:

“The buy-to-let market is clearly booming; with rents at a high and buy-to-let mortgage rates dropping to historic lows, there is great potential for prospective landlords.

“The finding that the average two-year fixed rate has fallen by 0.37% in just one year is particularly good news for older borrowers who are looking to access their pension pots to invest in bricks and mortar.

“The increase in deals with no fee is a sign that buy-to-let lenders are trying to diversify and offer borrowers more choice than ever before. However, borrowers still need to weigh up the true cost of a mortgage to ensure the best deal is secured. Anyone thinking about entering this sector would be wise to seek the advice of an independent financial adviser to see if buy-to-let really is the best place for their investment.”