Paragon Bank saw its full-year buy-to-let lending increase by 18.2% to £1.9bn on the back of strong demand from professional landlords, the company’s full-year results reveal.
The results show an increased focus on specialist buy-to-let lending in the year to 30th September 2022, which comprised of 98% of the company’s 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.
Green lending, which includes loans on properties with an EPC rating of A to C, rose sharply during the period. During the year, Paragon lent £832.2m 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 £226m, reflecting the strong performance of the Group.
The buy-to-let new business pipeline, loans passing through the underwriting process, stood at a record £1.26bn at the year-end, 24.6% higher than a year earlier, providing a strong platform for growth into the 2023 financial year.
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%.
Richard Rowntree (pictured), Paragon Bank 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 unto 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 £10bn of equity in their mortgaged properties, so are well-positioned to withstand any economic headwinds.”
