Paragon halves buy-to-let lending

Permalink: Paragon halves buy-to-let lending
by Gill Montia

Paragon has reported that its lending to buy-to-let customers has halved.

The firm has been forced to cut back on new business because the ongoing credit squeeze is restricting its ability to borrow in the wholesale money markets.

As a result, buy-to-let lending has halved over the past six months as compared with the same period a year ago.

The lender’s finance director, Nicholas Keen, says: “The credit environment remains difficult, impacting the workings of the money, banking and capital markets.”

Mr Keen expects lending to fall even further in coming months stating: “If you look at the credit markets at the moment they don’t look like they’re getting any better … if anything they look like they’re getting a bit worse so it could be a long wait until the capital and bank markets are back to a normal level of functional operation.”

Paragon’s difficulties have led to speculation that the company could be an acquisition target, but as the financial crisis continues this seems increasingly unlikely.

The firm is warning that pretax profits for the first-half of 2008 will be below those recorded in the first six months of last year, partly as a result of exceptional costs of up to £10 million related to an emergency £287 million fundraising in February.

However, 2008 profits are still expected meet market expectations.