The Bank of England last week said a growth in buy-to-let lending could pose a risk to the financial stability of the wider economy.

The central bank said landlords were most vulnerable to interest rate rises and that many loans were still on an interest-only basis.

However, the Intermediary Mortgage Lenders Association has now said the sector was not growing beyond a sustainable size.

Its director John Heron said the growing sector reflected the rise in demand for rental properties.

“The Bank of England’s comments on buy-to-let are based on their observation of strong growth in lending in recent years,” he said.

“It should be understood, however, that while there has been substantial growth, this has been from a low base post-crisis and lending today is still no greater than it was 10 years ago and is well below the levels achieved before the crisis in 2007.

“The rising cost of homeownership is among many factors driving demand for rental properties, including the fall in social housing, changing work patterns, growing numbers of students, high levels of immigration, later marriage and rising separation rates.”

The Bank of England was also concerned with the loosening of criteria making it easier for people to take out a buy-to-let loan.

The market increased by 8% in last year alone, it said.

“Despite the increase in higher loan-to-value (LTV) products, few go above 80% LTV compared to a pre-crisis norm of 85% LTV,” he said.

“We look forward to an open and frank debate on buy-to-let growth but strongly urge against a rush to judgement.”