Paragon mulls lending again as arrears stabilise

24th Nov 2009 07:31

Specialist mortgage lender Paragon is considering increasing its lending book again after bad debts stabilised in the second half and wholesale funding markets picked up."Whilst these are early days, recent improvements in funding markets will encourage us to look more confidently to reinstating the funding programme to support new lending going forward," Paragon added.Paragon's full-year profits rose as the lender got a one-off boost from a debt repurchase.Pre-tax profits for the year to September came in £54.3m against £53.7m. Net interest fell to £135m from £140m and underlying profits dropped to £45.3m from £66.9m, but an £18m gain following the purchase of debt at a discount offset this. The dividend for the year rises by 10% to 3.3p.Paragon, which specialises in lending to landlords, and said the fall in interest rates had helped the second half."Landlords have benefited considerably from the reduction in interest rates during the year, Paragon's variable mortgage rate charges at 30 September 2009 being less than one-third of the rate a year earlier, against which rents held up well, it said.At 30 September 2009, 1.54% of accounts were more than 3 months in arrears (2008: 0.53%) compared to 3.23% reported by the Council of Mortgage Lenders.Bad debt charges totalled £65.9m compared with £62.2m for 2008, but the charge for the second half of the year, at £27.2m, was considerably lower than the first half charge of £38.7m, it added.Arrears on the consumer finance loans book rose from 4.61% at 30 September 2008 to 7.94% at the year end.