Paragon sees lending return as rents rise

UK SPECIALIST mortgage lender Paragon Group said yesterday it expected lending to increase as a result of higher demand in the private rented sector as it reported higher-than-expected full-year results.

The lender said profit before tax stood at £71.8m for the year to 30 September 2010, up almost 25 per cent from £54.3m the previous year.

Paragon said its strong performance came as a result of strong buy-to-let distribution, encouraging levels of mortgage applications and improving arrears performance that was well below its peers.

The firm resumed lending in September, after being forced to close its doors in early 2008 because of higher lending costs at the height of the financial crisis.

Paragon chief executive, Nigel Terrington said market conditions were very favourable for landlords, due to strong levels of tenant demand.

“There are currently not enough properties in the private renting sector to accommodate demand,” Terrington said. He also added that rents will rise “quite strongly” over the coming months.

Paragon added it expected to issue mortgage backed securities in 2011.