Northern Rock upbeat, thanks to cheap credit

Mortgage bank Northern Rock yesterday underlined the buoyancy of the property market, revealing that levels of lending were "very strong".

In an upbeat trading statement the bank said it was confident there were no storm clouds ahead.

Despite gently rising interest rates a combination of good levels of employment, shortages of properties for sale and the relatively low cost of servicing debts "mean the home-moving market will remain underpinned", said Northern Rock.

All three of its lending arms - home loans, personal and commercial - were performing well, and the bank said it had started April with a pipeline of new business totalling £4.6bn - 20% higher than at the start of January.

Remortgaging continued to be strong, and currently accounts for two in five of all its new mortgage loans.

Despite two interest rate rises since the start of November, the bank insisted there were no early warning signs of any big credit problems.

"The risk profile of new lending is still improving, with the proportion of higher loan to value loans continuing to decline."

The bank said it was comfortable with analysts' predictions of a 13% rise in pre-tax profits to about £430m.