THE buy-to-let boom is over, for the time being at least. Figures from the Council of Mortgage Lenders show that the number of new loans fell by 4% in the first half of the year. This follows an 18% decline in the second half of last year.

The number of buy-to-let mortgages has increased by more than 2,000% since 1998. Rising property prices, coupled with falling stock markets, resulted in thousands of investors deciding to become landlords. However, many who were hoping to make easy money have found it harder than they thought as the supply of rental property has outstripped demand in some areas and the rate of house-price growth has slowed.

The Royal Institution of Chartered Surveyors reported last month that rental yields — income as a proportion of the property’s value — have risen for the first time in five years. But this is largely due to the fact that house-price inflation has been slowing or falling, so the rental incomes landlords receive become a higher proportion of property values.

Continued uncertainty over the future direction of house prices is deterring the opportunist investors who saw buy-to-let as a way to make a quick buck. However, many experienced landlords consider the current climate a good time to expand their portfolios.

Mike Boles at Savills Private Finance, a mortgage broker, said: “We have entered a period of calm in the buy-to-let market, with novice investors falling by the wayside. The bulk of our clients are experienced investors, some with hundreds of properties in their portfolios, and they are continuing to expand where they see opportunities. The number of mortgages we are arranging for these buy-to-lets is up 96% on last year.”

These investors are taking advantage of a weak housing market. Potential buyers have been holding off because they fear big price falls, and this has pushed up rental demand.

Investors are also benefiting from a knock-on effect: many vendors have been struggling to sell because buyers are reluctant to enter the market. This allows investors to negotiate discounts.

Nigel Terrington, chief executive of Paragon Group, which owns two specialist buy-to-let lenders, Paragon Mortgages and Mortgage Trust, said: “Many investors have an incredible network with the local estate agents and they know who’s selling, which properties have been on the books for a while and which vendors need a quick sale. They are then able to buy below market value.”

However, discounts may be harder to come by in the near future. Some housing commentators believe this month’s interest-rate cut could help kick-start the market as some of those who have been holding off decide to take the plunge. Experienced investors may therefore be less inclined to buy.

Instead, they may choose to remortgage where possible, as buy-to-let loan interest rates have also come down following this month’s base-rate cut. In addition, many lenders have reduced their rates and relaxed their lending criteria because of increased competition in the market. Investors who took out a loan a couple of years ago may find they can make big savings by remortgaging.

A survey from Mortgage Trust found that buy-to-let intermediaries expect the bulk of their business over the next three months to come from remortgages rather than people taking out new loans.

Boles said: “Average rates a year ago were 5.75% to 6%. Borrowers can now get a fixed-rate loan for between 4.69% and 4.99% — a saving of 1% or more, or £1,000 a year for someone with a £100,000 mortgage.”

The Mortgage Works has the cheapest fixed-rate loan, at 4.69%. This is fixed for three years. The minimum deposit is 15% and there is a 1.5% fee. If you want to lock in for longer, the best five-year rate is from Mortgage Express at 4.74%. Again, the minimum deposit is 15% and the fee is 1.5% of the loan size.