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Do you expect to see less or more second charge mortgage lenders in 2018?

Lender posts 42% second charge surge

In a trading update for the period 1st October to 31st December 2016, or Q1 2017, the specialist lending group posted £13.6m of second mortgage originations and investments, up from £9.6m in the previous quarter and £11.4m year-on-year.

This growth came as part of a major boost in business growth for Paragon, which saw its total originations and investments for Q1 climb to £380.7m from £254.4m in the fourth quarter of 2016.

Nigel Terrington, group chief executive at Paragon, said: "We have made a strong start to a year that will see the group continue its transition to a lending and operational model that is orientated around Paragon Bank.

“The lending growth we have seen in asset finance is encouraging and reflects the increasing diversification of the group.”

In addition to its seconds growth, Paragon reported a 68% rise in development finance originations, which rose from £6m in Q4 2016 to £10.1m in Q1 2017.

Asset finance also soared, with originations climbing from £17.9m in Q1 2016 to £55.7m in Q1 2017, though the earlier results reflected just two months of business due to the acquisition of asset finance specialist Five Arrows in November 2015.

“The lending growth we have seen in asset finance is encouraging and reflects the increasing diversification of the group,” Nigel commented.

By contrast, Paragon did reveal its buy-to-let (BTL) advances had fallen from £400.9m in Q1 2016 to just £185.2m for the same period in 2017.

This drop was partially attributed to the tightening of market criteria as a result of the Prudential Regulation Authority’s underwriting changes.

Despite this, Paragon’s latest BTL figures did represent an 8% rise on lending in the fourth quarter of 2016 (£171.3m).

The group’s BTL pipeline also rose from £321.1m at the end of September 2016 to £639.8m for December 2016.

Nigel added: “Lending across all divisions and the strong growth in the buy-to-let pipeline bodes well for the year as a whole.”

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