Buy to let lending surged in March as landlords borrowed £2.7 billion, according to trade body the Council of Mortgage Lenders (CML).

Lending by banks and building societies was up 12% in March compared to February 2015 and 21% year-on-year.

Borrowing was evenly split between buying new homes to rent out and remortgages – with 8,600 purchases loans worth £1.2 billion and 9,400 remortgages worth £1.4 billion.

Buy to let purchase deals increased 8% from February and 13% compared with 12 months earlier.

Remortgages rose by 15% from February and 29% year-on-year.

During the first quarter of 2015, buy to let lending represented 18% of all mortgage borrowing, which the CML says is the highest proportion of lending since records were started in 2006.

“This was mainly driven by both a fall in remortgage and house purchase loans to home-owners activity in this period,” said a CML spokesman.

“There were 52,300 buy-to-let loans advanced in the first quarter – down 3% on the previous quarter but up 15% on the same period in 2014. These loans came to £7.8 billion, up 1% on the first quarter and up 28% on the first quarter of 2014.”

The rise in buy to let borrowing linked with the economy falling into deflation for the first time since the 1950s can affect the ability to repay debt.

Property investors who purchased buy to let properties before the credit crisis have seen house price inflation shrink their debt, while rising rents have made servicing the borrowing easier.

However, this reverses when an economy dips into deflation as debt stops shrinking, and if wages and rents stop rising some property investors could face financial difficulties.

According to recent figures from the Office of National Statistics, house prices increased by 9.6% over the past 12 months, while wages were up 2.2%.

Read the full Council of Mortgage Lenders report