FORMER building society Northern Rock yesterday forecast the housing market would remain buoyant this year, as it reported a 16 per cent jump in half-year profits.

The North-East company, which employs more than 3,000 people in the region, said for the six months to June 30, pre-tax profits rose to £152.6m, compared with £131.2m for the same period the previous year.

It also revealed that it had created 226 jobs in the past six months, 211 of them in the North-East.

These jobs were mainly at the group's Gosforth, Newcastle, headquarters with some at its administration centre in Sunderland.

Since the first of January 2000, the group has created almost 1,000 jobs, 675 in the North-East.

Yesterday the company also said there were 120 jobs in the pipeline for the region as it pledged £80m investment for expanding its head office.

There was also good news for the group's 80,000 North-East shareholders. They stand to receive an interim dividend payment of £32.50, their highest since the group converted from a building society in 1997.

In 1997 the group set up the Northern Rock Foundation and donated five per cent of its pre-tax profits to it to be given to good causes, many of which are in the region.

This time it is set to receive £7.6m. Since conversion the foundation has received £57.8m.

The buoyant house market helped fuel a 50.5 per cent increase in Northern Rock's net lending to £3.5bn, giving it an estimated share of the UK mortgage lending market of 8.5 per cent.

It added that, although it does expect the house market to slow, it should still remain buoyant this year.

Chief executive Adam Applegarth said: "The housing market will slow, but the economic conditions of historically low interest rates, low unemployment and the lack of supply of new housing stock should underpin the mortgage market going forward."

David Baker, chief operating officer at the bank, said although the market remained buoyant, the group was starting to see signs of slowing.

He said: "We are expecting a gradual slowdown over the next six months, but it will still be pretty busy."

James Leal, banking analyst with fund manager Gerrard, said: "It is a good news story - the business model seems to be holding up."