MORTGAGEnews
Mortgageupdate BUY TO LET REBORN Paragon returns to new BTL lending
John Heron Director of Mortgages
Rates and availability In its first offering since February 2008, Paragon Mortgages will offer a range of buy-to-let products to include fixed rates starting from 5.30 per cent and tracker rates starting from 4.30 per cent. Paragon’s lending criteria mean it can offer professional landlords facilities to limited companies, multi-unit blocks and Houses in Multiple Occupation. However, there is to be no lending fest,
T
he Paragon Group has returned to new lending and launched a range of buy-to-let mortgage products targeted at professional landlord investors. It is Paragon’s aim to return to
its market-leading position in the buy-to- let sector, specifically targeting professional landlords. This is an area of the market currently underserved, to say the least, by buy-to-let lenders after the collapse of the rapidly rolling buy-to-let bandwagon when lenders bailed out with incredible haste as the banking crisis broke, liquidity dried up and the recession hit. Lately the sector has been dominated
by just two lenders, accounting for up to 80 per cent of new business written. The number of available buy-to-let
products has fallen from over 3,600 in July 2007 to approximately 280 today. Many of these products are focused towards the novice or small-scale landlord, and fail to cater for professional landlords’ more complex financial needs. Council of Mortgage Lenders figures
show that buy-to-let lending hit its lowest point since 2001 by both value and volume last year, and this reduction in lending is starting to feed through to supply constraints in private rented sector property. The Association of Residential Letting Agents revealed in July that 70 per cent of its members reported more tenants than available properties. According to The Royal Institution of
Chartered Surveyors’ UK Lettings Survey, this supply constraint is starting to result in rental inflation.
32 NOVEMBER 2010 PROPERTYdrum
even at Paragon, which says that it will “maintain a prudent and risk-averse approach to new lending, placing greater value on long-term customer relationships, credit quality and profitable products than simply market share.” With each application underwritten on an individual basis, rather than relying on computer scoring, Paragon employs its own team of surveyors to assess the property thoroughly and designs its products to appeal to good quality, experienced landlords.
WheRe’s the money coming fRom? Paragon has arranged funding via a new £200 million warehouse facility provided by Macquarie Bank. The facility’s revolving nature will mean it can be used repeatedly to pre-fund Paragon’s future securitisation deals, giving it a sustainable and secure funding platform. Paragon also gave a trading update. The
Board expects operating profits for the year to 30 September 2010 to be above current
PRoducts fixed: Two-year fixed at 5.30% Two-year fixed at 5.50%
tracker: Two-year 4.30% (Libor + 3.5%) Two-year 4.80% (Libor + 4%) Five-year 4.55% (Libor + 3.75%) Five-year 5.05% (Libor + 4.25%)
market consensus forecasts, and around the upper end of the analysts’ current expectations, which range from £40.5 million to £65.0 million. John Heron, Paragon Group’s Director
of Mortgages, says, “We are really excited about our return to new lending. The market is still fairly subdued and the road back to a ‘normal’ market is going to be a long one, but we are back in the race and we will do our level best to make sure that we expand the choices available in buy-to- let finance for landlords and intermediaries. “Access to buy-to-let mortgage finance is
still a major issue for residential property investors, and particularly professional investors who may exceed lenders’ aggregate lending limits or who find that their more complex or unique finance requirements cannot be met by the standard buy-to-let lenders. Competition is vital for a healthy and vibrant buy-to-let market, and we aim to provide that competition. Supply of private rented sector property is already under severe strain, which is leading to rental inflation. It will be professional landlords that stimulate the growth of the sector, and we want to be there to help them achieve this.”
We are really excited about our return to new lending... we’re back in the race!’
2% fee 2.25% fee 2% fee
2.25% fee 2% fee
2.25%fee
65% max LTV 75% max LTV
65% max LTV 75% max LTV 65% max LTV 75% max LTV
Lending will begin through a specialist panel of brokers as Paragon is fully committed to mortgage intermediary distribution, although it will also accept direct business.
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