by Mark Johnston
Paragon, the buy to let mortgage provider is resuming lending after it has managed to secure new funding. This will come as positive news to would be investors as the rental is booming due to more and more people looking to rent rather than buy.Paragon is a leading buy to let mortgage provider in the UK. Their Customers include professional landlords and residential property investors alike.
Paragon’s chief executive, Nigel Terrington said: “Demand for rental property has never been as strong. A lot of first time buyers can’t get mortgages or don’t want to take on a mortgage. Demand to rent out property was being driven from the likes of students and immigrants arriving to work.
The buy to ley market boomed during the days before the credit crunch. Easy credit meant that anyone could become a landlord but competition was rife. The credit crunch saw many wanna be landlords go bust and repossession was widespread. With lenders making it harder for first time buyers to get onto the property market more and more of them are looking to rent which has bolstered the rental market. Landlords want to take advantage of this but are finding it hard to find funding, Paragon have realised this and taken positives steps to get back into the market.
The specialist lender was forced to close its doors to new lending after it found it hard to raise finance during the credit crunch. It has now secured £200 million in new lending and is open for business once more.
At the start of the month the British Bankers Association (BBA) reported a fall in the number of loans being approved. The figures fell to their lowest point since last year.
Paragon sees this as an opportunity for buy to let landlords. The fewer first time buyers there are on the market the larger demand there will be on the private residential sector. Nigel Terrington hopes that the situation will mean landlords have access to cheaper properties but higher rentals which could cause a buy to let boom.
Paragon’s new lending which has been secured from Macquarie Bank should return their balance sheets to a growth position. They highlighted that over the last eleven months they have managed to redeem £230 million of their buy to let book. This has resulted in them posting some strong trading figures and falling arrears. Paragon is now forecasting a profit well above the £58.2 million which the market expected. This has had an impact on their share price where at times they have seen increases well above ten percent. Their market high as been as high as 182.7p which resulted in a market capitalisation of about £514 million.
Nigel Terrington, Paragon’s chief executive said that he was hoping to be able to issue some mortgage backed securities in 2011 to be able to sure up and strengthen Paragons finances. This is a positive move as the mortgage backed securities market has shown signs that its on the mend.
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