The slow death of the buy-to-let market is forcing lenders into a mortgage price war as they fight to survive the drop in borrower demand.
The Post Office is the most recent lender to dramatically cut rates, offering a new two-year fixed rateof 1.33 per cent, which is the lowest ever available according to Moneyfacts.
A spokesman for the comparison website said: “Post Office Money is making its mark on the buy-to-let market with the launch of its new deals, many of which are heading straight to the top of the market,” she said.
“As a result, it is likely these will be popular option for landlords however, with a sizeable fee borrowers will need to ensure they do the maths to ensure this is the most cost-effective option for them.”
This follows similar moves from other lenders to reduce rates in an attempt to maintain business and garner new customers.
Measures introduced under George Osborne, including tax and stamp duty changes, have been blamed for the decrease in the buy-to-let market. Figures have shown a 23 per cent drop in buy-to-let lending, with some lenders suffering falls of over 50 per cent.
Some landlords are considering abandoning the market altogether, with one in five planning to sell up within the next five years.