ref="http://www.cityam.com/company/paragon-group-of-companies">PARAGON, the buy-to-let mortgage provider, has returned to new lending after pulling out two years ago due to the global economic turmoil.
Paragon chief executive Nigel Terrington said the company would specifically target professional landlords – an area of the market which it believes is underserved by buy-to-let lenders.
Terrington said there were two primary reasons for Paragon’s decision to return to lending at the current time, namely very high levels of tenant demand in the UK and a more stable funding environment.
Tenant demand is being driven by weakness in the wider housing market, difficulty in securing mortgages for first-time buyers, and high levels of demand from immigrants, Terrington said.
“Fourteen per cent of all properties in the UK are privately rented,” he added. “That’s a figure that is only going to keep growing as the population rises.”
Paragon has secured a new warehouse debt funding facility with Macquarie.
“Our model is to finance ourselves via the securitisation markets, which went through a very disrupted period through the credit crisis,” Terrington said. “But today, we’re seeing it performing at a better level than at any time since 2007. The core of the market is now dominated by traditional long-only bond investors, who understand the market thoroughly and aren’t highly leveraged.”
Paragon hopes to build its book back up to the kind of market share it had before the crisis – around 10 per cent, or £1bn, by the end of next year.
Paragon struck out at the previous government, saying specialist lenders suffered when big banks were shored up in the crisis.
“Buy-to-let is an increasingly important part of the UK housing market and competition is vital for a healthy and vibrant market,” Terrington said.