Housing pick-up for Northern Rock

Northern Rock says it has started the year strongly

UK bank Northern Rock has said it has seen a "gentle trend" of first-time buyers returning to the housing market in late 2005 and early 2006.

The former building society said its net residential lending during the first three months of 2006 was 14% higher than at the same time in 2005.

Northern said it was "comfortable" with forecasts of £352m ($612m) for its 2006 post-tax attributable profit.

The bank's total lending pipeline is at £5.7bn, up 15% from a year ago.

"We have started 2006 strongly, with lending performance and pipeline ahead of the good numbers of the comparable period last year," said Northern Rock chief executive Adam Applegarth.

The bank added that remortgaging was expected to represent 45% of gross lending in 2006.