New mortgage lending across the buy-to-let sector increased by 85% year-on-year in the first quarter (Q1) of 2018, reports Paragon Banking Group.
Across all business lines, the firm reported a 65% rise in new advances, to deliver £470m of new lending in Q1.
Within this total, Paragon’s mortgage lending grew by 84% to £367m, with buy-to-let advances standing at £343m. Second charge and specialist residential lending rose by 74% to £24m.
In the buy-to-let market, Paragon increased its share of more specialist, portfolio landlord business, despite a backdrop of lower annual lending volumes in the sector overall.
This follows the implementation of the Prudential Regulation Authority’s (PRA’s) new requirements to 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 31st December 2017 moving to 79% complex. The pipeline rose from £604m at 30th September 2017 to £619m at the end of December.
The Group also demonstrated strong progress in its strategy to deliver greater diversification. Paragon grew Q1 commercial lending by 21% to £103m, as it continued to develop its franchise. It also maintained strong progress in deposit raising, with savings balances exceeding £4 billion at the quarter end – up by 98% from £2 billion at 31st December 2016.
John Heron, the Managing Director of Mortgages at Paragon, says: “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.”