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Paragon reports bumper buy-to-let lending following PRA rule changes

  • 23/01/2018
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Paragon reports bumper buy-to-let lending following PRA rule changes
Paragon new mortgage lending jumped by 84% year-on-year in the three months to December 2017 as the lender scooped a larger share of the specialist buy-to-let market.

Buy-to-let lending grew to £342.9m in the quarter, while other mortgages reached £23.6m in the quarter, the bank today reported.

The lender has increased its share of the specialist buy-to-let market after the Prudential Regulation Authority (PRA) rules for portfolio landlord mortgages took effect in September last year and prompted mainstream lenders to exit the space, Paragon said in the trading update.

The PRA underwriting rule changes have had a significant impact on applications during the quarter with 79% coming through as complex and just 21% as simple, the bank added.

At the same time buy-to-let redemption levels remain high at an annualised rate at 21% for the new book and 12% for the total portfolio.

The bank’s overall lending grew by 65% between October and December 2017, the first quarter of its financial year, compared to the same period in the prior year.

Development finance increased by 43%, helping total commercial lending to grow by 21%.

The group also bought specialist broker Iceberg during December for £5.2m, with a further £13m to be paid, subject to meeting performance conditions, over the coming five years.

And deposit balances have increased above £4bn, almost double the same period a year earlier.

Landlord lending volumes across the market are lower year-on-year despite increased remortgage activity.

Chief executive Nigel Terrington said: “We have made excellent progress during the first quarter.

“The lending growth achieved across the group has been outstanding and reflects the increasing strength of the franchise.

“Our retail deposit base continues to deepen, providing us with a stable platform for growth and the ability to optimise further the group’s funding structure.

“The organisational changes we completed last year, coupled with the growing demand and opportunity within specialist UK lending markets, will enable us to build on this momentum throughout the year.

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