Paragon grows mortgage loan book to £12.9 billion

Specialist lender Paragon Bank has reported a 4.7% growth in its mortgages loan book in the year to September 2023, benefitting from good customer retention and strong levels of new lending.

The lender said its mortgages loan book at the end of its full-year period stood at £12.9 billion, compared to £12.3 billion at the same point last year.

Overall, Paragon Banking Group reported a record underlying operating profit of £277.6 million for the period, up 25.4% on last year.

Total mortgage originations were broadly flat at £1.88 billion, partly due to the lender’s pipeline hedging policy protecting customers in the pipeline from rate volatility at the time of last year’s mini budget.

“We delivered a strong set of results despite the challenging market conditions,” stated Richard Rowntree (pictured), managing director of mortgages at Paragon Bank. “New lending was broadly in line with the previous year, which reflects our hedging policy designed to protect customers as well as our focus on portfolio landlords who remained active in the market.

“While the overall market was down, we continued to see healthy demand for more specialist buy-to-let propositions, such as houses in multiple occupation, which we are well-placed to serve.”

Paragon pointed out that it increased its focus on specialist buy-to-let during the period, with 98.8% of completions classed as specialist, while it also recorded an uptick in lending on property with an energy performance certificate (EPC) rating of ‘A’ to ‘C’, with completions at £904.6 million for the period, up 8.7% on last year.

Paragon’s mortgages arrears performance remained strong, with arrears on the buy-to-let book finishing the period at 0.34% compared to 0.69% across the broader buy-to-let market. The division also benefits from low loan-to-value coverage across the book at 62.8%, with Paragon’s landlord customers benefiting from £9 billion of equity in their mortgaged portfolios.

“The group’s performance for 2023 again demonstrates the strength of our business model, with underlying profits up 25.4%, loan book growth of 4.7%, and retail deposits increasing 24.3% to £13.3 billion, outperforming the market, providing strong liquidity and supporting growth,” stated Nigel Terrington, chief executive at Paragon Banking Group.

“While the external environment remains dynamic with high interest rates and inflation, the group remains well placed to continue supporting its customers in its chosen specialist markets.”

Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, Twitter, and LinkedIn.