mortgage lender Northern Rock took evidence of a faltering property market in its stride yesterday after reporting a continued strong trading performance.

The company, based in Newcastle, has an estimated 8.4 per cent share of the mortgage market.

Northern said it expected annual profits growth to be in line with hopes, and that its lending record during the recent quiet period for the housing market had been encouraging.

In a trading statement, chief executive Adam Applegarth said: "Evidence of a slowdown in the housing and mortgage markets is now being seen, but the benign economic conditions of historically low interest rates and low unemployment look set to continue."

Updating the market on the first nine months of its financial year, the company said it remained comfortable with market forecasts for profits in the range of £395m to £435m.

The average of £427m would represent an underlying improvement of 12 per cent.

Following the update, shares climbed more than three per cent, or 25p, to 735p.

It continues to expect the number of transactions to be about 1.4 million for the year with a similar number expected the following year.

In July, Northern Rock announced a 14 per cent rise in half-year underlying profits to £200.3m after a 30 per cent increase in total net lending to £5.1bn.