Bradford & Bingley said lending levels hit record highs

Its comments came as it reported a 10% rise in underlying pre-tax profits to £180.4m for the six months to June.

The UK's biggest provider of buy-to-let mortgages said the sector had been buoyant in the first half of the year.

But it noted that recent rate rises had slowed the wider housing market and it had seen a "modest" rise in bad debts.

The bank also said it would buy back up to £250m of its shares over the next 12 months.

'Strong performance'

Gross residential lending over the first six months of the year rose 51% to £7.2bn, while net residential lending climbed 92% to £4.5bn.

"Bradford & Bingley has delivered another strong performance in the first half," said chief executive Steven Crawshaw.

"We've achieved record levels of lending and solid savings growth. Our pipeline of new business is at all-time high levels providing us with a good start to the second half."

The bank said that it expected the buy-to-let sector would "continue to outperform the mainstream market in the second half and beyond, as the supporting demographics continue to drive demand over the medium-term".