The bank said levels of new business were very healthy

The West Yorkshire-based bank said it was comfortable with forecasts that its 2006 underlying pre-tax profit would hit �329.6m, up from �310m in 2005.

The buy-to-let mortgage specialist said the housing market outlook was strong and new business was "very healthy".

New business volumes in the first half of 2006 would match the record levels in the second half of 2005, it said.

During that period, new residential lending jumped to �4.7bn from �2.5bn in the first half.

Demand for residential property is expected to exceed supply for the foreseeable future Bradford & Bingley Bradford & Bingley's share price

"The fundamentals that support the housing market remain strong with demand for residential property expected to exceed supply for the foreseeable future," said a B&B spokesman.

"Unemployment and interest rates remain low and we expect these factors to remain favourable."

The bank said the buy-to-let market was in good shape with increasing job mobility, a growing number of households, and the rise in the student population all driving demand.

However, it also said the volume of claims for compensation related to endowment and investment products had "increased markedly" and it was reviewing its provisions and may take a future charge.

It was assessing whether the rise, which follows a drop in claims in the second half of last year, was temporary or a new trend and would update investors in its half-year results in July.