Buy-to-let mortgage lending soared past the £5 billion mark in the past three months, leading to fears the housing market may once again be over-heating.
Lenders advanced 40,000 mortgages, worth £5.1 billion, to buy-to-let investors in the third quarter of 2013, according to data published by the Council of Mortgage Lenders.
Both the number of buy-to-let loans and the value of lending were the highest since the third quarter of 2008 - near the peak of the financial crash.
Jackie Bennett, CML's head of policy, said: "Strong rental demand is contributing to the continuing expansion of the buy-to-let sector, but growth is also being helped by improved conditions in funding markets and more widespread availability of mortgages.
"These conditions are creating more opportunities for landlords to remortgage, as well as helping to fund increased activity in the mortgage market more generally. This spring, we have seen the highest levels of lending to first-time buyers since 2007, alongside the continuing recovery in the buy-to-let market."
George Spencer, chief executive officer of online lettings group Rentify, said demand is set to contine for some time: "Demand from tenants continues to be strong, as many delay getting a foot on the housing ladder themselves, perhaps because they haven't got a deposit or want to retain some flexibility.
"Because the recovery is coming from such a low base, we expect the market to continue to grow at an impressive rate in coming months. We are adding rental properties to our website at the rate of 600 a week and now have 140,000 landlords and tenants registered with us as both sides look for alternatives to traditional high-street letting agents."
The 40,000 buy-to-let loans advanced in the third quarter were up 19% on the 33,000 seen in the first three months of the year.
But in the wider housing market, house prices are also rising as a result of more flexible lending criteria and first-time buyers re-entering the market.
The latest LSL Property Services house price index, published today, shows the average house price in England and Wales has hit a record high of £232,969.
David Brown, commercial director of LSL Property Services, comments: "House prices have never been higher. 2013 has marked the time when the property market recovered from the 2008 financial crisis. The market is palpably stronger than a year ago and confidence is returning to lenders and buyers.
"The Funding for Lending scheme can take plenty of the credit, as can Help to Buy. Both schemes have helped banks boost first-time buyer lending by providing them with credit to offer more loans to new buyers and reduce rates on house purchase mortgages."
But he warned: "Despite this overall improvement in the market, the level of first-time buyer activity is still around half of what might be considered normal levels. Both the lack of housing supply and rising competition in the property market are supporting prices, but at the same time making it more difficult for first-time buyers.
"The Government urgently needs to address housing supply if it is serious about boosting home ownership levels. One way would be to remove stamp duty, which is a disincentive to buying for both home movers as well as first-time buyers."