Buy-to-let mortgage specialist Paragon reports arrears improvement

Landlord Expert
By Landlord Expert January 28, 2010 16:05

The lender saw the proportion of its borrowers behind on their mortgage repayments by three months or more fall from 1.54% to 1.50% in the fourth quarter of 2009.

That is a better performance than the mainstream residential mortgage market according to the Council of Mortgage Lenders.

Paragon said that the low Bank Base Rate had helped to keep buy-to-let mortgages affordable for its borrowers. It also said that it would come back inot the UK mortgage market soon if the securitization markets re-open.

Paragon has traditionally funded its mortgage lending by packaging up pools of mortgages and issuing bonds against their cash flow – otherwise known as securitization.

Since the securitization markets closed almost completely in late 2007, Paragon has stopped all new mortgage lending.

Paragon said conditions have continued improving for potential issuers of mortgage-backed securities, and it is keeping an eye on the market so that it can eventually revive that funding model.

John Harvey, Paragon's head of structured finance, revealed that the company will meet with investors in mortgage-backed securities next week, not for a specific deal but to update them on Paragon's business.

Non-deal roadshows often lead to new issuance if investors give the company feedback that they are receptive to the idea.

"In the meantime we shall continue to seek new business opportunities to supplement growth," the group said.

The statement that it will lend again once these markets have thawed will be welcomed in the buy-to-let sector where mortgage finance is now very difficult to come by.


Landlord Expert
By Landlord Expert January 28, 2010 16:05

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