Paragon Banking Group has reported a 65% year-on-year increase in new advances across all business lines to deliver £470 million of new lending in the first quarter of 2018.
Within this total, Paragon’s mortgage lending grew by 84% to £367 million, with buy-to-let advances up 85% to £343 million. Second charge and specialist residential lending grew by 74% to £24 million.
In the buy-to-let market, Paragon’s experience and capability enabled it to increase its share of more specialist, portfolio landlord business despite a backdrop of lower year-on-year lending volumes in the market overall.
This follows the implementation of the PRA’s new requirements for underwriting more complex mortgage applications in September 2017 which led to a realignment of competition with some mainstream lenders exiting the portfolio segment or offering only a limited proposition.
The mix of Paragon’s buy-to-let completions in the quarter included 66% of loans to landlords with more complex portfolios. The impact of the PRA underwriting rule changes from September had a more profound impact on application flows during the quarter, with the mix in the pipeline at 31 December 2017 moving to 79% complex. The pipeline rose from £604 million at 30 September to £619 million at the end of December.
The Group also demonstrated strong progress in its strategy to deliver greater diversification. Paragon grew first quarter commercial lending by 21% to £103 million as it continued to develop of its franchise. Paragon also maintained strong progress in deposit raising, with savings balances exceeding £4 billion at the quarter end, up 98% from £2 billion at 31 December 2016.
John Heron, Managing Director of Mortgages at Paragon said: “Paragon was the first lender to offer buy-to-let mortgages over 20 years ago and has developed its specialist capability around professional landlords over many years. It is very well aligned with the developments we have seen in the market following changes in government policy and regulation in the sector and this has allowed Paragon to significantly increase lending to portfolio landlords with more complex requirements.
We are continuing to focus on product and technology developments that will deliver improved products and services to our landlords and intermediaries with the roll-out of new mobile applications and document upload over Q2.”