Paragon makes return to market

The group, which trades as Paragon Mortgages and Mortgage Trust, withdrew from the market in February 2008 but is back writing new loans after securing a 200m funding facility in September.

Paragon said landlords were witnessing very high levels of rental demand as the current depressed state of the house market results in more would-be homebuyers renting in larger numbers and for longer periods.

With new lending previously restricted to further advances to existing borrowers, the company's buy-to-let portfolio stood at 8.3bn at the end of September.

However, it said the credit performance of its mortgages over the year had been "exemplary", with the rate of three-month plus arrears in buy-to-let standing at 0.83 per cent, against the market average of 2.45 per cent.

The resulting 40.5 per cent fall in provisions for bad debt to 39.2m contributed to a rise in pre-tax profits to 71.8m from 54.3m a year earlier.

The company added: "Low interest rates have increased affordability for customers, reducing the incidence of new arrears and assisting the correction of past arrears.

"The loan books continue to be carefully managed."

In September, Paragon became the first independent, non-deposit taking lender to come back to the market since the credit crunch when it announced a 200m debt facility from Macquarie Bank.