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Buy-to-let lenders advanced a record 130,400 loans in the second half of last year, an increase of 39% over the preceding six months, according to new data from the Council of Mortgage Lenders.

The value of lending in the second half of 2005 was £14.6 billion, 47% higher than in the first six months of the year. This was also a record.

Lending in the second half of the year increased the number of outstanding buy-to-let mortgages to 701,900, worth a total of £73.4 billion (8% of the total market at the end of 2005). During this period, the size of the outstanding buy-to-let market grew 11% by volume and 16% by value, compared to the first half.

Overall the figures show that both loans for house purchase and remortgaging made a significant contribution to the growth of new buy-to-let lending in the second half of last year.

There was a slight softening of lending criteria during the period. The average maximum loan-to-value ratio for buy-to-let lending is now 85%, and lenders expect monthly rental income to exceed mortgage payments by at least 25%.

At the same time, however, the proportion of buy-to-let loans in arrears of three months or more declined, from 0.7% to 0.68%. This proportion was lower than for the mortgage market as a whole, where the number of loans in arrears increased slightly from 0.88% to 0.92%.