Buy to let lending dropped back by 5% in the first quarter of the year, according to official figures from the Council of Mortgage Lenders (CML).
Banks and building societies agreed 32,300 new landlord loans worth £3.7 billion - down from £3.9 billion in the final three months of 2011.
However, buy to let lending was 66% higher at the peak of the market in 2007, says the CML, reporting loans to buy rental properties down 9% and remortgages down 1% in 2012.
The latest figures are still 30% up on the same period last year.
Buy to let has expanded market share as a total of all mortgages - from 12.2% at the start of 2011 to 12.8% in the last quarter, increasing the number of loans to 1.4 million worth £159.4 billion.
Mortgage lending conditions have remained the same for the past three years - with loan-to-value averaging 75% loan-to-value with 125% rent cover.
Meanwhile, the number of landlords with mortgage arrears of more than three months marginally dropped to 1.7% of all buy to let loans and 1,680 rental properties were repossessed in the quarter.
CML director general Paul Smee said: "Even though buy-to-let lending is running at only around a third of its peak levels, the sector is continuing its gradual expansion. It has become an important part of the overall landscape of housing provision in the UK.
“It is not surprising that the buy-to-let repossession rate is higher than in the owner-occupier sector, where the focus is on forbearance and trying to keep owners in their homes. In the rented sector, expired tenancies allow repossession to be undertaken without unexpected disruption to tenant households. In absolute terms, the number of buy-to-let repossessions remains only a small proportion of total repossessions.”