FTSE 250-listed Paragon Bank said new business levels were running “ahead of expectations” as the lender remained on track for its full year targets.
Paragon, based in Solihull in the West Midlands, is a major provider of loans to professional landlords with at least four properties. It also lends to medium-sized housebuilders typically seeking loans between £5m and £10m.
In a trading update covering the nine months to June, the lender said its buy-to-let application flows have been strong, resulting in a pipeline increasing slightly during the quarter to £888.5m. This was up from £594.6m at the end of September last year.
Commercial lending volumes were also above their 2023 level, with growth in SME lending helping to offset lower flows in property and motor finance.
But Paragon also reported that it had seen an increase in enquiry levels for its property loans since the bank reported its half year results in June.
“The new government’s focus on developing the scale of new house building also enhances the outlook for
this sector,” it said.
There were few signs of stress in the buy-to-let portfolio, with three-month plus arrears on the loan book dropping to 44 basis points at the end of June from 68 basis points at the end of March.
However, the slight increase in stage 3 accounts in property finance, reported in June, continued during the third quarter.
Paragon Bank confirmed its guidance for the remainder of the year, including a net interest margin of 310 basis points. mortgage lending advances between £1.4-£1.6bn and commercial lending between £1.1-£1.2bn.
“Margins, costs and credit performance continue to perform in line with expectations, whilst strong new business flows reflect improving customer sentiment and more favourable economic conditions,” Nigel Terrington, the bank’s long-time boss said.
“We carry good momentum into the remainder of the year. Our strong balance sheet and high-quality customer base, allied with our in-depth sector expertise, positions us well to take advantage of improving market conditions”.