Signs of slowdown in housing market

The housing market is facing a slowdown, according to mortgage bank Bradford & Bingley, which also announced a jump in pre-tax profits this morning.

The former building society announced that its pre-tax profits rose by 5% to ?125m in the six months to June, an increase it largely put down to strong lending in the low interest rate environment. However, chief executive Christopher Rodrigues said he expected both the housing and mortgage markets to slow in the coming months.

The bank's expectations are in line with those of rival Halifax, which reported some early signs of a slowing housing market at the beginning of the month.

"We expect house price growth to slow in the coming months as more sluggish income growth, higher interest rates and lower buy-to-let volumes reduce overall demand levels in the market," said Gary Styles, Halifax's head of group economics.

Despite recent worries that the buy-to-let market is coming off the boil, leaving landlords without tenants, Bradford & Bingley said arrears levels remain "very low", with only four repossessions relating to buy-to-let mortgages in the first half of the year.

The bank, which attributed the rise in profits largely to the performance of its Charcol and Marketplace brands, said that the investment market was likely to remain challenging.

"Stock market volatility in recent months has affected investor confidence, and we expect investment product sales will decline in the second half," the bank said in its report.

Bradford & Bingley also denied that it was considering putting itself up for sale, despite recent speculation to the contrary.