Mortgage applications have increased by 31% at the Co-op in the first half of 2010.
Co-operative Financial Services, which includes the internet bank smile.co.uk, also revealed it increased its operating profit by a third, to £109.3m, in the first half of 2010.
Profits are up from £81.4m from the first half of 2009.
A total of £1.1bn was borrowed by mortgage customers and £0.4bn to businesses.
Total customer deposits increased substantially by £1.4bn.
Impairment costs have been reduced significantly, down 41.1% to £43m from £73m last year after improvements in arrears collection and credit risk profiling.
The Bank says its residential book is now predominantly prime in nature, geographically spread with low and reducing LTVs.
Pre-tax profits, membership distributions and fair value amortisation to the half year of £75.9m, 50.3% higher than the first half of 2009.
At the end of June 2010 the Bank had a capital ratio of 13.2% and a tier one ratio of 9%.
Large inflows of retail and corporate deposits strengthened the customer funding ratio still further to 110% from 104% at December 2009.
The continuing strength of CFS’s customer proposition and advocacy scores helped total income rise by 21% to £673.5m from £556.4m.
The Bank is integrating Brittania Building Society into the group after its acquisition.