The Mortgage Market is Solid According to Northern Rock

Northern Rock, one of the largest mortgage lenders in the UK, stated today that the country's mortgage and housing market looked good despite recent Bank of England Interest Rate increases.

Northern Rock expects house prices to rise in line with the rate of earnings growth - as they have done over the recent period of time.

Northern Rock states, based on first quarter 2007 statistics, that net residential lending - which dominates its business - was up by 42 per cent compared with the first quarter of 2006.

Looking to the second quarter of 2007 Northern Rock said its total lending pipeline stood at £6.7 billion - an increase of 16% over the second quarter results for 2006.

Chief executive of Northern Rock, Adam Applegarth, said three interest rate rises since last August had not caused the housing market serious damage.

"While indications remain for a less benign outlook, with gently rising unemployment, we expect conditions overall to remain supportive for the UK mortgage market," he said.

The level of interest rates remain low by historic standards however The Bank of England's Monetary Policy Committee meets later this week to decide on interest rates and whilst they may remain flat at 5.25% for now it is expected they will rise soon.

Overall Northern Rock expects the gross UK mortgage market to rise to above £360bn this year, from £345bn the previous year.

Northern Rock stated that credit quality remained "robust" with lending "tightly monitored and controlled" and focused on a high proportion of borrowers with a proven payment track record.