Paragon sees 16% increase in mortgage lending

Michael Lloyd

May 22, 2019

Specialist banking group Paragon has reported a 16% increase in mortgage lending to £834m in the first half of the year, up from £721m in the same period last year.

Buy-to-let business dominated new mortgage lending, up by 17% to £788m, benefiting from Paragon’s focus on professional landlords with larger portfolios who are becoming increasingly important to the supply of private rented property in the UK.

John Heron (pictured), managing director of mortgages at Paragon said: “Complexity around the private rented sector resulting from fiscal changes and increased regulation has resulted in a shift in balance with professional landlords providing a greater proportion of the supply of rented homes.

“Paragon’s experience of lending in this segment over the last 20 years has helped to consolidate a leading market position and grow market share where others have seen their positions eroded.

“Private landlords are vital to the UK’s housing provision and we continue to develop our product and service capability to support them in developing their business.”

The proportion of ‘complex’ buy-to-let completions – comprising customers operating through corporate structures or running large portfolios – increased from 72% to 88% of the total during the first half of 2019 and represented 92% of the pipeline of future business at the end of March.

Underlying profits in the mortgage segment grew by 17% to £85m and the net interest margin – which measures the difference between Paragon’s funding costs and what it earns from lending – improved from 1.55% in the first half last year to 1.69%.

By the end of the period, Paragon’s mortgage loan book had increased by 7% to £10.8bn.

Alongside mortgage lending, Paragon delivered an 89% year-on-year increase in its commercial lending portfolio to £1.3bn, which the lender said demonstrates how it is transforming to a more broadly-based banking group focused on supporting British SMEs and consumers in specialist lending markets.

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