Mortgage News
Paragon profits soar 35%
An “exemplary” buy-to-let portfolio performance has led to Paragon’s pre-tax profits increasing 34.8% to £39.5m in its half-year results for the six months to the end of March.
This was up from £29.3m in H1 of last year.
Paragon reported that it has advanced £50.2m of buy-to-let loans since returning to new lending in September last year and revealed it has £94.7m new lending in the pipeline.
In addition, it said that buy-to-let arrears across its £8.2bn of buy-to-let assets, including receiver of rent cases, have dropped significantly to 0.75% compared to 1.17% in the first six months of 2010.
Paragon said its buy-to-let redemption rate was at historic lows, while its new business initiatives have delivered £3.5m profit.
John Heron, director of mortgages at Paragon, said: “The performance of the buy-to-let portfolio continues to be exemplary, with strong customer retention and low arrears levels combining to deliver excellent revenues and profits for the period.”
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He added that the group had been encouraged by the new business levels it had seen through its Paragon Mortgages and Mortgage Trust brands since returning to lending, which were in line with its expectations.
He said: “Given the start-up nature of the relaunch and the normal conversion cycles for buy-to-let mortgage loans, the portfolio of completed accounts builds over time.
“However, our new lending activities are gathering momentum and pipelines loans are converting to completed loans at an increasing rate. Given the complex nature of many of the buy-to-let propositions Paragon handles, individual transactions can take some time to complete.
“Nevertheless, completions to date are £50.2m and we have £94.7m of offers and applications in the pipeline, which is in line with our expectations.”
Heron added: “In addition to developing our new lending proposition, we have been building the loan portfolio acquisition and third party servicing arms of our business. We feel this is a growth area and with an estimated £250bn in unwanted loan assets up for sale by UK banks there are opportunities in the marketplace.”