Banking group Northern Rock today said it expected the housing market to remain buoyant as it forecast a 20% increase in its lending in the first half.

Good employment levels, a housing shortage and relatively low debt servicing costs meant the home-moving market would remain underpinned, the Newcastle-based company said.

The bank said its lending was continuing at very strong levels, with its three lending arms - residential, commercial secured and personal unsecured - all performing well.

Northern Rock said it expected first quarter total net lending, which was 16% above the same period last year, to rise about 20% by the half year against the first half in 2003.

It said lending remained dominated by home loans, with remortgaging continuing to be strong and accounting for about 40% of new residential lending.

Chief executive Adam Applegarth said the bank was confident of continuing to achieve its targets for growth in assets under management, profits and return on equity.

"We are again set to deliver against our low cost, high quality, high growth strategy," he said.

Friday April 02, 2004