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Paragon expands buy-to-let mortgage book with significant gains and advancements

Paragon Banking Group has announced a 4.5% growth in its buy-to-let mortgage book, driven by high customer retention and robust operational performance. The company revealed its Half Year results for the six months ending 31 March 2024, showcasing significant financial gains and strategic advancements.

Growth in the buy-to-let mortgage book
Paragon’s buy-to-let loan book reached £12.9 billion, marking a 4.5% increase compared to the same period last year. The bank retained over 80% of its specialist landlord customers whose products matured during this period. Annualised buy-to-let redemptions fell to 6%, the lowest rate since the first half of 2015, down from 10.7% last year.

Financial performance and new lending
The banking group reported a 13.5% rise in underlying profits, amounting to £146.3 million for the first half of the year. New buy-to-let lending totalled £649.3 million, with the lending pipeline expanding by 47%, from £594.6 million in September 2023 to £874.0 million in March 2024.

Richard Rowntree, Paragon Bank’s Managing Director of Mortgages, highlighted the bank’s success: “This is a strong financial and operational performance. We were pleased to see our mortgage book grow during the period, which reflects the re-engineering of our retentions operation two years ago and the excellent work undertaken by that team.”

Focus on green mortgages
Paragon continues to prioritise eco-friendly lending, with over half of its mortgage completions for properties rated EPC A to C. The bank lent £345.7 million against these high-efficiency properties, representing over 55% of new mortgage lending compared to 46% last year. Rowntree noted, “We were also pleased to see lending on EPC A to C properties account for over half of mortgage completions for the first time. We were one of the pioneers of green mortgages and it’s therefore pleasing to see that reflected in these results.”

Renewed confidence in the housing sector
Despite a dip in new buy-to-let lending reflecting broader housing market trends, Paragon has rebuilt its business pipeline to match the levels seen in early 2023. Rowntree added, “As anticipated and forecasted, new buy-to-let lending fell during the period, reflecting the wider housing sector, but we have built our new business pipeline back to the levels we saw at the same point in 2023. We’re also seeing renewed levels of confidence amongst landlords, particularly those portfolio landlords with four or more properties.”

Paragon’s strong financial performance and strategic focus on green lending and customer retention underscore its resilience and adaptability in a challenging market. The bank’s ability to grow its loan book and maintain high levels of customer retention while supporting eco-friendly initiatives positions it well for continued success in the buy-to-let sector. As landlord confidence returns, Paragon is poised to capitalise on emerging opportunities and sustain its growth trajectory.