Research from independent financial research company Defaqto has revealed that the average interest rate charged on a two-year fixed rate buy-to-let deal fell from 5.78% in September 2010 to 4.86% in September 2011.

During the same period, the average three-year fixed rate buy-to-let deal fell from 6.03% to 5.56%, five-year fixed decreased from 5.94% to 5.69% and the average two-year Base Rate tracker for buy-to-let fell from 5.01% to 4.11.

Average arrangement fees for buy-to-let finance also fell.

However, buy-to-let mortgages remain significantly more expensive than residential homeloans. For example, Defaqto pointed out that the average two-year fixed rate for a residential mortgage is 3.52%, and five-year fixed is 4.25%.