There were 32,000 buy-to-let loans worth £3.5bn taken out from April to June, the highest volume and value since the last quarter of 2008.
Remortgaging accounted for 65% of the overall increase in the buy-to-let lending in the quarter.
The value of the 15,230 loans for remortgage at £1.6bn was 26% higher than in the first quarter and accounted for 53% of the total gross buy-to-let lending up from 51% in the first quarter.
The number and value of outstanding buy-to-let mortgages continued to grow. At the end of the second quarter 1.34m buy-to-let mortgages worth £154.5bn were outstanding.
This was up from the 1.26m worth £148.8bn at the end of the same period in 2010.
The CML said that although this quarter’s increase is significant, the market is currently running at around one third of the levels seen at the peak of lending in 2007.
For the first time since 2008, arrears rates for buy-to-let mortgages are lower than in the owner-occupied sector.
In the second quarter all buy-to-let cases where loans were over three months in arrears were at 28,100 or 2.09% of the total, 0.05% lower than in the owner-occupied sector.
Paul Smee, director general of the CML, said: “If you consider the buy-to-let recovery alongside the increase in first-time buyer numbers we published yesterday, it appears that first-time buyers are not being displaced by buy-to-let landlords but are holding their own in a restricted market.
“So this is encouraging news for those who want to rent, as long as it is realised that much of the current increase is for remortgage rather than house purchase.”
David Whittaker, managing director of Mortgages for Business, said: “Landlords are basking in the glow of the buy-to-let sector at the moment.
“Product numbers are up, yields are healthy and rents are in no danger of falling. Amid a backdrop of uncertain markets and social unrest, the buy-to-let market is one of the few beacons of light in an otherwise depressing picture.
“Landlords and professional property investors are voting with their feet that now is a good time to be in the market and we expect this to continue throughout the rest of the year.”
Nigel Terrington, chief executive at Paragon, added: “These figures show a healthy demand from landlords to expand their portfolios in response to the strongest level of tenant demand in modern times.
“Competition is growing once again in the buy-to-let market, with an increasing number of lenders offering an innovative range of products. This benefits both landlords and intermediaries, who would have previously had only two or three lenders to choose from, and ultimately tenants as they have a wider choice of rented property.
“The strong level of remortgage business is interesting as it could be an indication that landlords are releasing equity in lowly-geared properties, or properties without any borrowing against them, to help fund new purchases.
“Approximately two thirds of properties in the private rented sector are unencumbered and landlords could use this equity to help further develop their portfolios.”
