Northern Rock sees 'encouraging' growth

Banking group Northern Rock remained on course to meet annual profit expectations today after strong performances in all areas of lending.

The mortgage specialist said it was comfortable with forecasts for profits in the region of £429m (€612.6m) – representing like-for-like growth in line with its own targets for the year at 12%.

The group added that lending in residential, commercial and personal unsecured areas had been strong with no sign of a deterioration in credit quality.

Chief executive Adam Applegarth described the growth and improvement in market share as “particularly encouraging”, despite the quieter housing market.

He added the company expected the positive trends to continue into 2005 with Northern’s current pipeline of agreed business being 23% higher than a year earlier at £5.4bn (€7.7bn). In residential, the figure is currently 21% higher.

Looking at prospects for the UK housing market, Northern said it believed interest rates were now close to their cyclical peak at 4.75%.

It believed prospects for the home moving market remained healthy but that the number of transactions was likely to be “subdued” next year.

As well as general slowdown in the market, Northern said it expected first-time buyers to be slow in returning to the market. It blamed increased levels of debt among 18 to 25-year-olds and the increased ownership of lower-priced properties by buy-to-let investors.