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Paragon lays foundations for return to mortgage market
Paragon, the specialist buy-to-let mortgage lender, has started laying the groundwork for a return to active lending, having closed to new business in 2007 after the collapse of the securitisation markets.
One of the original providers of buy-to-let, Paragon announced a surge of 84.3% in pre-tax profits earlier this week, thanks to an improvement in its margins and lower impairments.
It said it had taken steps to arrange initial financing that will allow it to start lending mortgages again.
Nigel Terrington, Paragon chief executive, said there were encouraging signs that the securitisation market was coming back to life.
About £10bn has been raised by securitisation issues since the beginning of October 2009, with Lloyds Banking Group and Nationwide among those that have successfully issued new mortgage-backed bonds.
“We are hopeful that 2010 will be the year we recommence lending,” he said.
“The residential asset backed securitisation market has improved significantly in recent months.”
Terrington said demand for private rented property was expected to stay strong given the ongoing challenges facing first-timer buyers.
He added that Paragon was also looking at buying existing loan books from other buy-to-let lenders, such as Northern Rock and Bradford & Bingley.