According to Paragon’s latest financial results, around £800.9m of mortgage lending was from specialist BTL business, with the remaining £11.2m coming from non-specialist BTL business.
The strong level of new BTL advances along with its “strong customer retention” mean that the net loan book in the mortgage lending division has grown by 4.5% year-on-year to £13.7bn.
Paragon added that its new front-end mortgage system has allowed it to “provide quicker responses to intermediaries and customers, as well as improving operational efficiency”.
This means it has been able to decline “inappropriate cases” earlier in the process, minimising the size of its new lending pipeline.
The firm added that the platform has been “extremely well-received” and there has been a 50% reduction in the time from application to offer.
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Paragon’s BTL pipeline came to £660m, with the firm reiterating that its new origination systems offered “advanced filtering on entry”, so pipeline comparisons are not like-for-like.
The firm added that its mortgage lending advances guideline of £1.6bn-1.8bn was unchanged.
BTL arrears rose to 51 basis points, an increase from 38 basis points at 30 September but a fall from 68 basis points in the same period last year. It added that it was “well below market averages”.
Underlying profit has risen by around 2.1% year-on-year to £149.4m.
Paragon added that the impairment charge on mortgage lending business came to £5.1m during the period, a drop from £8.7m in the same period the year before.
The report said: “Overall, despite competitive pressures in the market, our buy-to-let franchise remains strong, with the new origination system delivering a step change in its capabilities, providing a more effective and responsive service to landlords and brokers.
“While the PRS is currently subject to regulatory headwinds, there have rarely been times when this has not been so, and it remains fundamental to meeting the nation’s housing needs. This means that the viability of our landlord customers’ operations will continue, and their ongoing requirement for finance to support housing needs will underpin our business going forward.”
Commercial lending dips to £568m
Looking at commercial lending, Paragon said new business volumes came to £568m during the period, compared to £589.9m last year.
The firm attributed this to growth in SME and development finance being offset by “lower flows in the structured lending operation”.
Excluding structured lending, new loans in the division increased by 6.3% year-on-year.
Around £262m of lending was to developing finance and £247m to SME lending, while structured lending reported a loss of £12m and motor finance came to £71m.
The overall commercial lending book increased by 7.3% year-on-year to £2.3bn.
Paragon ‘optimistic’ about financial year ahead and beyond
Nigel Terrington, chief executive of Paragon, said it had been “another strong financial and operational performance in the first half of 2025, reflecting our disciplined approach and consistent track record of execution”.
He said: “Underlying earnings per share (EPS) increased 9.6%, supported by strong loan growth and a 25.1% increase in new mortgage lending. Our digital technology programme is enhancing customer experience and productivity and helping drive down our market-leading cost to income ratio even further. Our robust capital position has enabled us to increase our share buy-back programme to up to £100m for the full year.
“This period also saw major milestones in our digital transformation. We completed the roll-out of our market-leading buy-to-let lending platform and April saw the public launch of Spring, an innovative savings app, helping UK consumers use open banking to link directly to their current accounts and earn more on their money. These developments represent significant steps forward as we continue to diversify our offering and expand our digital reach.”
Terrington said Paragon’s “strong momentum and a resilient business model” meant the firm was “well-placed to navigate the evolving external environment and remain optimistic about the remainder of the financial year and beyond”.
