Paragon profit powers ahead

24th Nov 2010 07:14

Buy-to-let mortgage lender Paragon reported a sharp increase in full year profit on strong rental demand, a decrease in its provision for losses and as the turmoil of the credit market crisis continues to fade.Pre-tax profit rose to £71.8m for the year ended 30 September 2010 from £54.3m the year before. Underlying profit increased by 45.9% to £66.1m. A final dividend of 2.4p per share has been offered up from 2.2p before."Activity in the housing market remains subdued due, in part, to continuing tight credit conditions. The effect on the private rented sector, however, has been to maintain high levels of tenant demand," Paragon said in a company statement.With redemption rates low, arrears steadily reducing and margins improving, the group seems a world away from the dark days of the credit crunch. Looking ahead the group is expanding business activities and securing funding to support new buy-to-let lending. Landlords are experiencing very high levels of rental demand, strong rental growth and low finance costs, the group explained.In September the group announced a return to new lending, following the signing of a £200m warehouse facility and the recovery in the mortgage backed securities market during the year. "Whilst the UK economic environment remains challenging with the outlook for growth, unemployment and house prices all uncertain, the group enters the new financial year with a term-funded, high quality loan book. We expect that our new lending programme will expand over time and will be complemented by increasing opportunities to acquire loan portfolios," said Paragon.