Landlords looking to lock into a new buy-to-let (BTL) mortgage deal will be pleased to see that the average rates on two and five year fixed deals have fallen to their lowest levels since January.

The average rate on a two year fixed BTL deal now stands at 2.94%, its lowest point since January when it stood at 2.89%. Meanwhile, the average rate on a five year fixed BTL deal is now at 2.35%, its lowest level since December 2020 when it also stood at this rate.

Not only have average BTL rates fallen, but competition within the market has also increased, with the number of deals on offer now at their highest levels since 2007. The beginning of September saw 2,968 BTL deals in the market, the highest number of deals since Moneyfacts records began in 2007 when there were 3,305 deals in the market.

Falling rates on BTL mortgages, together with rising house prices and low savings rates, may make investing in a BTL property more attractive to investors, especially as, according to lettings agents Hamptons, the rental market is predicted to continue its post-pandemic growth. Saying this, those considering a BTL investment will need to factor into their consideration the tax implications of owning a BTL property, as well as the legal, financial and time commitments of being a landlord. More information about becoming a landlord can be found reading our guide on five steps to becoming a BTL landlord.

As well as this, although BTL mortgage rates on average have been falling, those looking for a mortgage with a smaller deposit of 15% – 85% loan-to-value (LTV) -should be aware that average rates in this market have risen.

“The maximum 85% LTV bracket has not only seen availability stall at 19 deals, but also the average two and five year fixed rates on offer for landlords with just 15% equity or deposit are a quite staggering 0.88% and 0.44% above their September 2019 equivalents, indicating that while lenders are competing for business, this eagerness does not seem to extend to the riskier end of the market yet,” explained Eleanor Williams, finance expert at Moneyfacts.co.uk.

Consumers considering a BTL investment, but who are unsure whether it is the best option for them may find it worthwhile speaking to an independent financial advisor who will be able to take into account their personal financial situation and requirements to highlight the best options, along with the potential risks. Readers of Moneyfacts.co.uk with over £100,000 in savings and investments can get a one hour free consultation with financial advisors Kellands – more information about this offer can be found here.