Mortgage deals in the buy-to-let market are becoming increasingly competitive, attracting investors to put more cash in that direction. It used to that but-to-let borrowers had to pay higher interest rates than people buying a home for themselves. Any gap between the two has now all-but gone.

In 2006 330,000 buy-to-let mortgages were taken out, according to the Council of Mortgage lenders (CML). This figures represents a rise of almost 50% on 2005.

But in 2007 interest rates are continuing the rise which began in August 2006, and investors in the rental property market are thinking carefully before making a purchase. Nevertheless the buy-to-let market still has strong demand and is backed by a low number of repossessions. With the housing market still on the rise, a lot of young people are still having to rent. This number is bolstered by immigrants from EU countries.

The buy-to-let market outperformed the general market last year, and with tenant demand said to be strong, rents said to be rising and less void periods, buy-to-lets are still a popular property investment. In these circumstances, lenders are ready and willing to lend for the buy-to-let market with no penalties.

BM Solutions, owned by Halifax, are offering a two-year tracker mortgage at 4.99%, requiring a 10% deposit. The downside is a fee of £1,499. A £100,000 repayment mortgage over 25 years would have monthly repayments of £584.

The same lender is offering a 5% mortgage for a 15% deposit. In this, monthly payments are £583 on a £100,000 loan.

There is a fixed rate buy-to-let mortgage available from Cheshire Building Society at 5.65% for two years. The fee is £799, and a 20% deposit is required. Their homebuyer equivalent is 5.45% for two years, a £499 fee and a 5% deposit.

The reduction in prices for buy-to-let mortgages has encouraged thousands of people to become landlords in recent times. Despite house price increase, the rental yield is still above 6%, thanks to rising rents.