Mortgage firm should use new ambitions to fund core activity

 
Elizabeth Fournier
SO, it looks like even the buy-to-let cash cow isn’t enough to satisfy FTSE 250 success story Paragon anymore. Paragon’s share price has been mirroring the rental market recently. Rents soared to yet another record high last month, with the average London tenant paying £1,102 a month according to LSL, while mortgage provider Paragon’s shares are up 50 per cent over the past six months. Now, not content with scooping up loan portfolios from banks desperate to offload them, Paragon wants in on the retail banking market.

At first glance, Hampshire Trust looks like a good fit. Away from standard savings accounts it specialises in short-term bridge loans and financing for residential property development. So the cultural fit is there – but what’s next? Hopefully, Paragon will use any new income stream to do more of what it’s good at and grow the buy-to-let business. But now it has set out its stall, investors are likely to hold on tight until a deal is agreed, stemming any hope of more short-term gains.