Paragon Bank grew its mortgage loan book by 4.7% in the year to 30th September 2023, according to the firm’s full year results.
The mortgage book at the end of Paragon’s full year period stood at £12.9bn, compared to £12.3bn at the same point last year.
Overall, Paragon Banking Group reported a record underlying operating profit of £277.6m for the period, up 25.4% on last year.
The lender reported good customer retention and robust levels of new lending, as well as new buy-to-let (BTL) lending that outperformed the market, despite challenging economic conditions.
Total mortgage originations were broadly flat at £1.88bn, partly due to Paragon’s pipeline hedging policy, which aimed to protecting customers from rate volatility at the time of the mini-Budget.
Paragon increased its focus on specialist BTL during the period, with 98.8% of completions classed as specialist, and recorded an uptick in lending on property with an Energy Performance Certificate (EPC) rating of A to C.
Completions on A to C-rated property stood at £904.6m for the period, up 8.7% on last year.
Arrears on the buy-to-let book finished the period at 0.34%, compared with 0.69% across the broader buy-to-let market.
The division also benefitted from low loan-to-value (LTV) coverage across the book at 62.8%, with Paragon’s landlord customers having £9bn of equity in their mortgaged portfolios.
Richard Rowntree (pictured), Paragon Bank’s managing director of mortgages, said: “We delivered a strong set of results despite the challenging market conditions.
“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.”
He added: “Whilst the overall market was down, we continued to see healthy demand for more specialist buy-to-let propositions, such as houses in multiple occupation (HMOs), which we are well-placed to serve.”
“I’m also pleased with our strong retention performance, which has been driven by the performance of the book written post-2010.
“We launched several initiatives aimed at improving retention of customers two years ago, so we entered this period with good processes in place to serve customers and brokers.”
