Strong BTL lending growth recorded by Paragon Bank

Paragon Bank has revealed that it has increased its full-year buy-to-let lending by 18.2% to £1.9 billion on the back of strong demand from professional landlords.

The company says that by focussing on specialist BTL lending, in the year to 30 September accounted for 98% of its new mortgage originations.

Specialist lending is classed as lending to landlords with four or more properties or complex lending, such as limited companies or houses in multiple occupation (HMOs).

‘Green’ lending has also risen

Paragon has also revealed that its ‘green’ lending, which includes loans on properties with an EPC rating of A to C, has risen sharply too.

During the year, the firm lent £832.2 million on A-C-rated properties, a 44% increase on the same period last year.

Operating profit before fair value items at Paragon Banking Group rose by 16.4% to £226 million, reflecting the group’s strong performance.

BTL new business pipeline

The buy-to-let new business pipeline, that is loans passing through the underwriting process, stood at a record £1.26 billion at the year-end – that’s 24.6% higher than a year before.

Paragon says this provides a strong platform for growth into 2023.

Arrears across the buy-to-let mortgage book reduced during the year to 0.15%, down from 0.21% and well below the broader buy-to-let sector, as reported by UK Finance, at 0.41%.

The low arrears figure reflects the strength of Paragon’s loan book, which benefits from low loan-to-values at an average of 57.9%.

‘Our specialist approach and focus on professional landlords’

Richard Rowntree, Paragon’s managing director of mortgages, said: “This was a strong performance from the mortgage division, reflecting our specialist approach and focus on professional landlords.

“The UK is experiencing unprecedented levels of tenant demand and our landlord customers are providing much-needed new homes into the private rented sector.

“I was particularly pleased to see strong growth in lending against properties with an EPC rating of between A-C; it’s important that the UK housing stock is upgraded as the UK transitions towards net zero by 2050.”

He added: “Paragon benefits from an excellent quality loan book, with seasoned assets and experienced landlords who have operated through different economic cycles.

“Our landlord customers now have over £10 billion of equity in their mortgaged properties, so are well-positioned to withstand any economic headwinds.”

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