A report, Buy to Let Mortgage Rates: The Real Costs Q4 2013, revealed that the cost of a three year fixed rate is almost the same as when swap rates bottomed out in April 2013 while five year costs have risen by around 0.1% per annum.

This is despite a 0.75% rise in three year swap rates and a 1% rise in five year swaps since April last year.

David Whittaker, managing director of Mortgages for Business, said: “Competition is set to intensify further still in 2014 – but eventually lenders will have to recognise increasing cost of funds.

“So whilst lenders’ margins are likely to fall during 2014 it is highly likely that interest rates will rise on medium term fixed rate mortgages reflecting the impending rise in Bank Rate.”

Whittaker said Mortgages for Business is advising investors to consider taking out five-year fixed rate mortgages now.

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The report also found that in early 2008 over half of all buy-to-let mortgage products were at 85% loan-to-value against the dominant product range of 75% now, with significant product ranges available at 60%, 65% and 80%.

Charges, such as lender arrangement fees, valuation fees and legal costs, saw no real change in H2 2013.

Meanwhile the number of products with no lender arrangement fee crept up to 10.8% in Q4, up from 7% in the previous two quarters which highlights the increased competition between lenders at the end of the year.