A typical fixed-rate buy-to-let mortgage has fallen in price in the last month but remortgaging landlords are still paying 3% more than they were two years ago.

The average two-year fix is currently 6.4%, according to Moneyfactscompare.co.uk, which is less than the 6.64% recorded in September.

For a five-year fix, landlords are looking at typical rates of 6.32% compared to 6.49% in October.

There is further good news as product choice, said Moneyfactscompare, has also grown. Landlords now have more than 2,500 deals from which to choose compared to just 1,000 a year ago.

But, with 2,581 mortgages on the market today, there are still fewer options than in October 2021 when there were over 3,000.

Indeed, the average two-year fixed rate was 2.92% in October 2021 and, for a five-year fix, landlords were paying just 3.18% on average two years ago before the Bank of England began hiking rates and the mortgage crisis set in.

Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “The buy-to-let market has seen a healthy growth in product choice month-on-month and fixed rates have fallen over the same period.

“These are encouraging signs for landlords looking to refinance who may have been concerned about rates escalating.

“However, those coming off a two- or five-year fixed rate deal will need to find more funds to afford higher mortgage repayments.”

How will your deposit size or equity impact your rate?

For those with a 20% deposit or equity, average rates across both two- and five-year fixed rates have fallen below 7%, according to Moneyfactscompare.

This is a niche area of the market, since 20% is the minimum deposit most lenders will accept in the buy-to-let market.

As such, for those who can stretch to 25% and who are prepared to lock in to a five-year deal the average rate is a much more attractive 5.85% at the moment.

Product choice in this loan range is also at its highest point on record, with over 600 deals to choose from, Moneyfactscompare revealed.

Buy-to-let challenges: Is it worth the effort?

Despite many challenges for landlords, the fall in rental stock means there are still opportunities for landlords which may provide optimism for the future.

Springall said: “Despite such positivity, some landlords may seriously be considering selling up, as the profitability of a buy-to-let portfolio may not be enough to cover costs. Over the years, landlords’ profit margins have been hit by a cull in mortgage rate tax relief, tax changes for Capital Gains Tax (CGT) and holiday lets, plus new EPC requirements.

“The enticement to invest for new landlords is prevalent, as rental growth on a newly let property hit 12% across Great Britain, according to a study by Hamptons, which also cited the long-term decline in rental stock will continue to underpin future rental growth.

“The months ahead for the buy-to-let sector are crucial, so any investor would be wise to seek advice before they commit and be conscious of any rental expectations amid rising costs.

“Providers will need to carefully balance supporting their existing customers and work hard to entice new business to encourage an optimistic outlook for investors in the months ahead.”