Long-term prospects for buy-to-let remain strong, according to Paragon Mortgages, which has revealed it plans to launch a number of new products in the coming months.
Buy-to-let completions for the mortgages division rose 82.5 per cent to £656.6m for the year to the end of 30 September 2014, while the banking division reported a lending total of £500,000 over the same period.
Speaking to FTAdviser, Nigel Terrington, chief executive of the Paragon Group, said that as the major high street banks retreat towards an ever narrower product range, he is confident that new opportunities will continue to open up for specialist lenders.
“We intend to grow the bank’s market share next year and are looking forward to offering consumers competitive additional saving and lending products.”
Over 2014 the bank launched three lending product lines – buy-to-let, second mortgages and car finance – whilst also raising £60m through savings products.
The bank also diversified its funding into warehouse facilities, securitisations, retail bonds, deposits and structured debt, which collectively raised £1.4bn during the year.
“This wider level of funding will not only provide the opportunity to grow our lending but importantly gives us a sustainable funding platform protecting against any future volatility in financial markets,” explained Mr Terrington.
“Paragon Mortgages continues to see significant growth, supporting the on-going structural changes taking place in the private rented sector,” he stated, noting that Savills recently forecast that the sector will grow from 18 per cent to 24 per cent of all English housing by 2019, driven by economic and social factors that are influencing rising tenant demand.
Mr Terrington added: “There is naturally a great deal of speculation about the direction of UK interest rates for 2015. We expect that any rises will be slow and graduated, which would have only a limited impact on prudent lenders and investors.”