Paragon Bank reports strong growth in buy-to-let lending

Lending to landlords with four or more properties, complex lending, and green lending all posted significant growth

Paragon Bank reports strong growth in buy-to-let lending

Paragon Bank has announced an 18.2%, or £1.9 billion, year-on-year increase on its buy-to-let lending, driven by strong demand from professional landlords.

The lender’s full-year results revealed an increased focus on specialist buy-to-let lending, which is classed as lending to landlords with four or more properties or complex lending, such as limited companies or houses in multiple occupation. This comprised of 98% of the company’s new mortgage originations in the year to September 30, 2022.

Paragon’s green lending, which includes loans on properties with an EPC rating of ‘A’ to ‘C’, also rose sharply during the period as it lent £832.2 million, a 44% increase on the same period last year.

“This was a strong performance from the mortgage division, reflecting our specialist approach and focus on professional landlords,” Richard Rowntree (pictured), managing director of mortgages at Paragon Bank, said. “The UK is experiencing unprecedented levels of tenant demand and our landlord customers are providing much-needed new homes unto the private rented sector.

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

The Paragon Banking Group also reported an increase in operating profit before fair value items by 16.4% to £226 million.

Its buy-to-let new business pipeline, loans passing through the underwriting process, stood at a record £1.26 billion at the year-end, 24.6% higher than a year earlier.

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, Paragon noted, gains from low loan-to-values at an average of 57.9%.

“Paragon benefits from an excellent quality loan book, with seasoned assets and experienced landlords who have operated through different economic cycles,” Rowntree added. “Our landlord customers now have over £10 billion of equity in their mortgaged properties, so are well-positioned to withstand any economic headwinds.”