New figures released by Paragon Mortgages suggests that investors are looking to purchase property before the tax changes in April.
The lender said in the final quarter of 2015, its lending to buy-to-let landlords nearly doubled. Mortgages for rental accommodation reached £401m, a rise of 80.6% on the same period in 2014.
What’s more, Paragon’s pipeline of future loans rose by 43% to hit £595.7m.
Profitable
This fantastic quarterly performance was a key feature in Paragon Group making a profit of £35.2m during the period. This was a rise of 14% on the year before.
John Heron, Director of Mortgages at Paragon, said, ‘our buy-to-let business has continued to grow and perform exceptionally well. Whilst over time recent policy developments may cause some softening in the rate of growth of buy-to-let at a market level, demand for private rented housing continues to remain strong and all indications suggest this is only likely to increase in the coming years.’[1]
BTL lending at Paragon up 80% in Q4 of 2015
Sensible
Despite the sudden surge in lending during Q4 of 2015, experts believe that Paragon’s buy-to-let growth will slow at a similar rate. However, Justin Bates, analyst at Liberum, believes the lender has not taken unhealthy risks to aid its quick expansion.
‘I’ve always considered Paragon to be a cautious, sensible lender at that is borne out in the credit quality statistics which are way ahead of industry averages,’ he noted. [2]
‘We see comments on the eye-catching growth rate of 80%, but that is not all new lending on new properties-around 60% of Paragon’s lending is remortgaging activity,’ Bates added.[2]
[1] http://www.propertyreporter.co.uk/landlords/btl-lending-up-80-according-to-paragon.html
[2] http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/12125251/Paragon-Bank-booms-with-80pc-growth-in-buy-to-let.html