The lender’s share price was rocked after it admitted it was having difficulties organising future funding with the capital markets frozen and commercially unattractive rates to renew a £280 million drawing facility.
However, John Heron, managing director of Paragon, insisted that the future of the firm, backed up by continued growth in the buy-to-let market, was secure; contrary to the image portrayed by the press.
“We were concerned last week that our image would be hit as some of the coverage, especially from the broadcast media, was atrocious. However, I think the market quickly saw this wasn’t another Northern Rock and we didn’t have the queues of savers. Paragon has a high reputation for specialist lending and we have secure funding lines. We will continue to lend prudently and we have had very good support from brokers.”
However, Heron warned that the market was in danger of talking itself into a possible recession and called on the regulator to do more to ensure market stability.
“We need to see the lead being taken by the regulator, Bank of England and the Treasury to support the market where necessary and give direction. When you compare the responses of the US Federal Reserve and the European Central Bank to ours, you can see how weak it’s been.”
Pierre Williams, head of communications at Instant Access Group, said: “Speculation doesn’t do anyone any good.”