Northern Rock said yesterday it looked set for a profits rise of almost 16 per cent after sustaining the strong performance seen in the first half of the year.
The lender added that affordability remained good for mortgage borrowers, despite the August rate rise by the Bank of England.
It said it expected the "relatively benign" economic environment to continue, which should provide support for the UK mortgage market as a whole.
Northern said it was comfortable with City forecasts for underlying profits of between £339 million and £363 million in the year to the end of December.
The average of that figure comes in at £357 million, which would represent growth of 15.9 per cent over the profits performance of 2005. Such an improvement is within the range set by the company at the start of the period.
Chief executive Adam Applegarth said: "We have sustained the strong performance of the first half of the year into the second half."
He added that the strong mortgage market - stemming from house transactions and remortgaging - meant the company had not been required to chase market share in order to meet its growth targets.
Mr Applegarth said credit quality in all of Northern Rock's loan books remained good and experienced no signs of deterioration since half-year results.
Britain's other high street banks reported sharp increases in impairment charges in the first half as consumers struggle to repay unsecured loans.
"Bad debts are expected to be down in the second half, but they did allude to this in July so we wouldn't read across for the rest of the sector," analyst Bruce Packard at Societe Generale said.
"Ninety per cent of their lending is secured, so you can't say the problems we're seeing in the rest of the sector, in credit cards and personal loans, are going to improve."
The company also pointed out that first-time buyers were drifting back to the market, as house price inflation in most parts of the country slowed towards the rate of wage inflation.
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said it appeared to be business as normal for the lender.
He added: "The Rock continues to concentrate on high quality generally secured loans, farming out marginally higher risk business to partners, whilst continuing to bear down hard on costs.
"Overall, 2006 looks like being another impressive year for Northern, but with the shares having already gained nearly 40 per cent over the last 12 months alone, market consensus opinion appears to be suggesting that the valuation may be up with events for now."
Northern Rock said it expected the UK mortgage market, boosted by stable growth and still relatively low unemployment, to hit lending levels of at least £330 billion in 2006 - just above previous forecasts - with similar levels in 2007.
The bank said its total pipeline of new lending business - or deals waiting to be finalised - stood at £6.5 billion, up 18 per cent from the end of June. The pipeline for residential lending carried into the final quarter is £6 billion, 21 per cent higher than at mid-year.
Northern Rock, which aims for costs to grow at between one-half and two-thirds the rate of asset growth, added it was in line with that target and expected its cost/income ratio to improve. Shares closed down 10p at 1158p.