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A fifth of Paragon BTL borrowers took payment holiday at pandemic height – results

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  • 03/12/2020
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A fifth of Paragon BTL borrowers took payment holiday at pandemic height – results
Paragon Bank reported results which exceeded projections with £1.205bn of lending in the year to September, despite income losses from a fifth of landlords taking payment holidays during the pandemic.

Just over 20 per cent of the group’s buy-to-let customers took payment holidays when offered, with five per cent still on payment holiday at year-end, falling to less than one per cent by the end of November.

Arrears on the buy-to-let book decreased in the year to 0.15 per cent from 0.18 per cent last financial year, although some arrears will inevitably have been suppressed by payment holidays.

The lender also demonstrated a greater focus on specialist buy-to-let lending, accounting for 93 per cent of total buy-to-let activity, against 89 per cent in 2019, although lending overall reduced by 18.6 per cent year-on-year due to the restricted market in the summer months.

The new business pipeline showed business returning to more normal levels heading into the new financial year, standing at £868.1m at the year-end, against £911.7m the previous year, as landlords reacted to strong levels of tenant demand.

Share dividends resumed with the “better than expected” full-year results, according to broker Shore Capital, as profitability resumes.

“Overall, we expect these results to be welcomed by the market, albeit the share price reaction may be tempered by the strong run the shares have already enjoyed in recent weeks,” added Shore.

Richard Rowntree, Paragon Bank managing director of mortgages, said: “2020 has been the most extraordinary year, but it’s one which has demonstrated Paragon’s resilience, our commitment to the market and the strength of our people and processes. Within four days of lockdown, over 90 per cent of our workforce was working from home and we remained open and lending throughout the pandemic.

“Overall lending reduced naturally as a consequence of the lockdown and the restrictions imposed on the housing market, but demand bounced back strongly post May and our pipeline at the end of October was nearly 15 per cent ahead of March 2020.”

Despite the disruption to lending activity caused by coronavirus, Paragon’s net mortgage loan book ended the year 4.6 per cent higher than the previous year due to lower redemption rates. The total mortgage book, which includes second charge and owner-occupied loans, stood at £10.8bn.

Elsewhere, within Paragon’s commercial lending division, development finance loans to SME housebuilders grew during the period to £385m, up from £363m last year.

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