Gross mortgage lending reached £20.1 billion in May, the Council of Mortgage Lenders (CML) has estimated.

This is a 12% increase on both April last month and on May last year, in which £17.9 billion was advanced.

The CML’s buy-to-let forecast for 2017 and 2018 has been revised down from previous expectations at the end of last year, reflecting tax and prudential burdens in the housing and mortgage markets.

The CML now expects buy-to-let lending of £35 billion in 2017 and £33 billion in 2018, a decrease from £38 billion in each year, forecast in December last year.

Paul Smee, the CML’s director general, said: “Remortgage activity and first-time buyers continue to drive lending this year. Looking ahead, we expect to see this trend continue, but not as strongly, as the factors supporting lending are blunted by less favourable economic conditions.

“Buy-to-let had a weak start to 2017, and the sector’s contribution to overall net mortgage lending has fallen considerably over the last year.

“While falling mortgage interest rates have helped support borrowing, tax and prudential measures are exerting pressure on the buy-to-let market. Following the distortion of the stamp duty change on second properties last year, we expected a slight recovery in lending levels. However, this has not materialised, and we therefore have lowered our forecast for buy-to-let lending this year and next.

“This re-emphasises the case for avoiding further changes to the tax and regulatory framework until the effect of these already in train have been properly assessed.”

Matthew Wyles, executive director at Castle Trust Capital, said: “We should not be surprised that hard pressed British landlords already reeling from discriminatory tax measures, hikes in Stamp Duty and increasingly constrained lending would halt their advance on the housing market and these figures from the CML confirm the inevitable.

“The political no-man’s land into which Theresa May’s ill-fated gamble has plunged the country is the latest reason for small time landlords to sit on their hands and no doubt we will see the slow down continue during the rest of 2017. But a shake-out in the buy to let market was long overdue and our data suggest that canny investors are already starting to stockpile cash so that they are ready to exploit the opportunities which will inevitably present themselves in the coming months and years.

“Astute intermediaries will see this a big and exciting opportunity. We certainly do and we stand ready to help.”