Buy-to-let lender Paragon re-opens its books to business
Specialist lender Paragons sudden return to the buy-to-let market could invigorate the entire sector.
Yesterday, it re-opened its books to new business with immediate effect, and launched a range of buy-to-let mortgage products. It closed its books to new business in February 2008. In its long-awaited comeback, Paragon is aiming to return to its top position in the buy-to-let sector and is specifically targeting what it calls 'professional' landlords, including those who want to buy properties such as student HMOs.
Funding is via a new 'warehouse' provided by Macquarie Bank, which will constantly provide a facility of £200m.
John Heron, Paragon Group's director of mortgages, said: "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."
Paragon shut its books in the wake of the credit crunch, which has cut back mortgage availability of buy-to-let products. Since the peak of 2007, the number of buy-to-let products has fallen from over 3,600 in July 2007 to approximately 280 today.
The lack of finance available to landlords has constrained supply and put up rents, according to recent surveys by both ARLA and the RICS. Council of Mortgage Lenders figures show that buy-to-let lending hit its lowest point since 2001 by both value and volume last year.
David Brown, commercial director of LSL Property Services, said: "It's great news for investors that Paragon has returned to the market. Demand for rental properties is high, and rents have risen for seven months in a row. But the constricted supply of cheap mortgage finance has been strangling new investment in the private rental sector.
"We are clearly still a long way from the market of two years ago, but the re-entrance of lenders like Paragon should give professional landlords hope that the lending market is beginning to loosen and that more funding is becoming available."
David Salusbury, chairman of the National Landlords Association, said: "We warmly welcomes the announcement from Paragon that it is returning to the buy-to-let lending market.
"An increase in the availability of buy-to-let mortgages will stimulate the private rented sector into playing a bigger role in providing a much-needed alternative to owner occupation during these difficult times."