The mortgage bank Bradford & Bingley (B&B) has said that the UK's housing market could be about to slow.

The bank gave the warning as it announced a 5% increase in pre-tax profits to �125.5m for the first six months of the year.

It also increased its dividend by 14% to 4.9p, and said it was on track to meet financial targets over the rest of the year.

"We remain comfortable with the market's expectations, despite our belief that both the housing and mortgage markets may slow," said chief executive Christopher Rodrigues.

Mr Rodrigues also dampened recent takeover speculation, saying that the business was not for sale.

Adjustment due

B&B has been benefiting from the boom in the UK housing market, and it said that both its estate agency and mortgage broking business had shown "excellent growth".

Income at its mortgage broking business rose 43% to �17.3m, while property revenues climbed 7.6% to �56.8m.

But Mr Rodrigues told BBC Radio 4's Today programme that recent record rises in house prices would not last.

"The housing market is not going to go on rising at the rate it has been," he said.

"What we're seeing is an adjustment to materially lower interest rates.

"Once that's worked its way through the system house prices we believe will increase along with inflation and along with wages because that's what pays for mortgages."

Mr Rodrigues said that while the slowdown may cool demand for new mortgages, demand for re-mortgaging would remain strong in the low-interest environment.

The bank also sought to calm fears over its exposure to the buy-to-let property sector, which accounts for a third of its new lending.

It said arrears levels were very low, with the percentage of loans more than 2.5% in arrears only reaching 0.26%, which B&B said was well below the industry average.

'Not for sale'

Mr Rodrigues tried to dampen speculation that B&B might be bought by a competitor.

Speculation has grown recently that Barclays was considering a takeover bid.

"We are not seeking to sell the business," Mr Rodrigues told reporters, but declined to comment on whether B&B had received any takeover approaches.

B&B also announced that Roderick Kent would replace Lindsay Mackinlay as new group chairman when Mr Mackinlay retired in November.

Mr Kent is currently managing director of Close Brothers.

In early trade in London the bank's shares fell 16p to 324p.