Mortgage lenders are returning to buy-to-lets amid evidence that rental yields have started to climb above 6%.

James Charles reported in the Sunday Times this week that typical yields have started to climb above 6% as landlords benefit from rising rents and falling or stagnant prices.

Analysis by Find A Property compared regional yields with the most popular types of buy-to-let properties and found that three-bedroom houses in Scotland produced an average gross yield of 6.5% last month, while one-bedroom flats earned a yield of 6% in London and 6.4% in the West Midlands.

However, not all cities are a good bet. In Sheffield, where average prices have risen £20,000 over the past year to £147,000, rents have only risen from £551 to £568. Typical yields have fallen from 5.2% a year ago to 4.6% last month.

Melanie Bien at Private Finance, the broker, said: “The important thing to look for is bargain properties with potential for high yields and capital appreciation. Although capital growth is harder to find, it is important for investors as it enables landlords to refinance more easily at a later date.”

Mortgage Trust, owned by Paragon, has a two-year fixed-rate deal at 4.99% and a two-year tracker, pegged at 3.09 points above three-month Libor, the interbank rate, so 3.99%.

Both deals are only for remortgages, available to those with a 25% deposit and have flat fees of £999, which are more attractive to some landlords than more costly percentage fees.

It will lend a maximum of £1m and investors can borrow against no more than five properties across the wider Paragon group. Repayments must cover 125% of rental income.

The day after Mortgage Trust returned to the market, BM Solutions, part of Lloyds Banking Group, shot back with a series of new deals with flat fees that were also aimed at those with smaller portfolios.

It has a two-year fix at 4.49% with a £995 fee for those with a 40% deposit, limited to loans below £150,000.

A two-year fix available to borrowers with only a 25% deposit on loans up to £300,000 has a higher rate of 5.9% and a £1,495 fee. It also has a 3.99% fix with a 3.5% fee, which requires a 40% deposit.

David Whittaker of Mortgages for Business, the specialist landlord broker, said: “These moves are evidence that lenders are finally beginning to compete with each other. These deals are aimed at borrowers needing standard deals.”

BM Solutions bases its rental calculations on the pay rate, so even those borrowing lower amounts could be better off with a higher rate and a high fee. It requires repayments to cover a minimum 125% of rent.

Other lenders, such as Paragon, use a notional payment rate of 7% when calculating rental cover. It demands that repayments cover 130% of monthly rental income.

David Hollingworth at L&C Mortgages, the broker, said: “Deals with larger fees that come with a lower pay rate can help landlords with lower rental income.”