Buy-to-let lenders approved mortgages worth £3.5bn between April and July in the sectors busiest quarter since the 2008 financial crisis.

There were 32,000 loans in the quarter, although the Council of Mortgage Lenders (CML) said its figures still showed the market is running at around one third of the level seen at the peak of lending in 2007.

Demand from buy-to-let investors has picked up in recent months as tight mortgage availability has caused the rental market to strengthen.

However, the CML pointed out that remortgaging accounted for 65% of the overall increase in buy-to-let lending in the quarter.

At the end of the second quarter, there were 1.34m buy-to-let mortgages worth £154.5bn, up from 1.26m and £148.8bn at the end of the same period in 2010.

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 BTL 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."