MORTGAGE specialist Bradford & Bingley today said it was confident the housing market will survive the fifth interest rate rise in less than a year.

The group's comments - following another hike in the Bank of England base rate to 4.75 per cent yesterday - came as it posted a five per cent rise in half-year profits to '140m and said it had a business with "strong prospects".

The buy-to-let specialist forecast that house prices would start to slow over the remainder of the year but added there was no cause to panic.

It told investors in today's half-year results: "We continue to believe that the fundamentals necessary for a sudden correction are not evident and that a gradual slowdown is the most likely outcome." The figures, which were at the top end of market forecasts, show its strategy of focusing on specialist areas continued to pay off, with lending balances up eight per cent to '27.9bn and lending profits before tax ahead four per cent to '113.3m.

With interest rates on the way up, B&B said it saw some pressure on margins but that the number of borrowers in arrears continued to be low. The former building society added it was on track to achieve the '40m of savings it announced in June, helped by the loss of 600 jobs. It is also in the process of selling non-core businesses, which range from mortgage-broking arm Charcol to the company's estate agency operation.

Chief executive Steven Crawshaw said: "The implementation of the strategic review is leading to a simplified, more focused business with strong prospects."

The group said its lending book was now made up of 80 per cent of residential mortgages and 20 per cent commercial and housing association lending. Within the residential arm, around 62 per cent of new lending was for buy-to-let properties.

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