In spite of the Bank of England’s five increases in borrowing costs since last August, buy-to-let investors seem undeterred. In the first half of this year, almost one in every seven new mortgages went to people who were buying properties not as homes, but investments.

The Council of Mortgage Lenders indicated yesterday that buy-to-let business is still booming. True, the 171,800 buy-to-let loans advanced by Britain’s banks and building societies was a fraction down on the previous six months. But it was still sharply up, by 13 per cent, on the same time last year and, overall, at its highest level in nine years. The total stock of outstanding buy-to-let home loans also saw its second-largest six-monthly increase on record, so that this sector now accounts for no less than 8 per cent of all outstanding UK mortgages.

There is, surely, more than a touch of wishful thinking to this unrelenting enthusiasm for buy-to-lets. It is getting harder and harder to extract any month-to-month returns on such investments: net yields from buy-to-let now stand, on average, at levels well below the interest cost on typical buy-to-let loans.

For the buy-to-let investor kept awake at night by the prospect of further increases in interest rates and a rising mortgage bill, there was,I however, some welcome news yesterday. The sudden and steep drop in headline inflation has made another near-term rate increase a little less likely. The data not only suggests that the supermarkets are doing a heroic job in keeping down prices, but that businesses generally are reining in wage bargains. All of that eases the pressure for a rate rise.

Mervyn King, the Bank’s Governor, gave warning last week that inflation figures would be “volatile in the short run”. One set of numbers will not deter the hawks on the Monetary Policy Committee. A further rate rise may be less imminent, but it is by no means off the agenda.

The buy-to-let sector may, therefore, lose steam over coming months, following in the wake of the rest of the housing market. And those looking to make a quick return may well find they got into the business a few years too late.

Nonetheless, in the UK, by contrast with much of the rest of Europe, property inflation has tended to outpace retail price inflation by a couple of percentage points. This is because one of the obstacles to a healthy economy continues to work in the favour of the buy-to-let investor: the housing shortage.

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