Paragon to resume Buy-to-Let lending
David Boyd, Managing Director, PAD4U Letting Agents Manchester writes:
Paragon have performed well during the recessions and this is bourne out by the fact they expect full-year profit to be at the upper end of analysts forecasts (40.5million-65million).
Perhaps more importantly Paragon's book has performed very well with arrears firmly in control with buy-to-let accounts with 3 months in arrears falling to 0.86% of book. This is very important as the consensus is that buy-to-let mortgages are far riskier than residential mortgages. However, many high street banks would be very happy indeed with 0.86% ratio of their book. The reality is, it isn't the type of loans that determines risk, it comes down to how well financial organisations understand their customers. Paragon always made efforts to learn more about who they were actually lending to and to differentiate experienced landlords from non-experienced landlords. The results demonstrate Paragons approach is the right approach and one can only hope that high street banks take notice and instead of turning off the taps completely, make efforts to lend based on better understanding on who they are actually lending to.
Macquarie bank have agreed to provide a new £200 million warehouse facility for Paragon. Paragon intends to commence lending with this facility and hopes to be able to securitize these loans. It will be interesting to see how easy it is for Paragon to securtize in this market
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