Following strong half yearly results released last week, Heron (pictured) said Paragon had begun making plans for 2016 by examining the developing needs of landlords.
“There has been something of an oversupply of short-term products to the market, particularly of two-year products. In a less certain world and a more volatile financial environment, landlords will want greater security. Looking at how we can deliver better longer-term products is going to be an important thing going forward,” he said.
The lender has recorded the views of landlords over the years through ongoing research and found that landlords have a risk averse attitude to borrowing.
“Landlords are actually quite lowly geared, borrowing across their portfolios is less than 40%. What they don’t like is huge fluctuations in the cost of their credit. Being risk averse they want to be as sure as they can of their costs and their income going forward. And that of course helps them to keep prices down for their tenants,” Heron said.
He added that Paragon was currently exploring a theme rather than a particular product at present.
Figures release last week showed Paragon’s new business pipeline more than doubled in the quarter ending 30 June 2015 to £864.9, compared to 352.7m, during the same period last year.
Heron explained the completion of its 61st securitisation deal last month, which totalled £300m, has helped the lender to compete more broadly in the buy-to-let market, including new lower loan-to-value products and its relaunch into the buy-to-let market in Scotland.
“Key to this diversification has been the development of Paragon Bank which provides the group with access to retail deposits and the further development of our structured finance capability with our latest securitisation, PM23, which has tapped both the sterling and euro investor market for these high quality mortgage-backed securities,” said Heron.
Heron said the surge in business seen in the first half of this year would not put service standards under pressure.
He added that the business was ‘well within’ its capacity to deliver consistent support to both its customers and brokers going forward.
“With the volume of business that we are currently writing, we are well within our capacity to manage and support both our customers and intermediaries. The group has the resources to allow it to continue to support the further expansion of our offering.”
