Meanwhile, the housing market generally has remained flat, with Nationwide reporting today that prices dipped by 0.2pc in January and highlighting the lack of buyer demand as people struggle to raise a deposit.

Would-be buyers could face an even tougher time trying to raise a mortgage in   the coming months as lenders are expected to tighten their borrowing   criteria amid weak economic conditions.

Louise Holmes, spokeswoman for Moneyfacts, said the buy-to-let area is "blooming" with a widened choice for landlords. She said: "During the peak of the credit crisis the number of buy-to-let deals shrank considerably as lenders saw it as a high risk area of the market.

"Many aspiring home owners have had their property dreams dashed due to strict lending criteria and large deposits, meaning the only option left is to rent. This increase in demand for rental properties has resulted in a degree of competition returning to the buy-to-let sector, giving it well-needed boost.

"These latest figures, particularly a reduction in the average rate, should make pleasing and encouraging reading for landlords and property investors."

Last month, Yorkshire Building Society announced plans to expand buy-to-let lending across England and Wales.

The lender entered the buy-to-let market in August, offering products through Accord Mortgages, its intermediary lending subsidiary, initially in London and the South East.

The Co-operative Bank's broker lender has also promised to up its mortgage lending in the buy-to-let sector by a third.

Platform, the dedicated intermediary lender of the Co-operative Bank, said it would lend at least £600 million in buy-to-let loans in 2012, as uncertainty in the wider housing market was fuelling rental demand.