Loans for buy-to-let rose 23% last year while general mortgage lending fell, says Council of Mortgage Lenders

The buy-to-let property market is still strong despite troubled credit conditions, reveals research from the Council of Mortgage Lenders.

Figures showed the number of buy-to-let loans rose 23% last year, numbering more than 1 million and accounting for 10.3% of all outstanding mortgages.

Lending rose in the second half of the year while general mortgage lending was beginning to fall.

The Council of Mortgage Lenders said demand from landlords had continued, despite problems at lenders such as Northern Rock.

CML director general Michael Coogan said: "Tenant demand for private rented property remains strong, and buy-to-let is fulfilling an important role in helping to deliver an increased flow of high-quality homes to rent.”

"Many buy-to-let loans have interest rates linked to interbank rates, so may have seen hefty increases in payments when Libor rose to abnormally high levels in the second half of 2007.

He added: "These are now likely to be returning to lower levels in line with the reduction in Libor rates since December last year.”

Figures also showed landlords have lower levels of arrears and repossessions than home buyers in general.