Wednesday, May 20, 2009
Para-gone still hanging on
FT: Paragon calls for state funding
Paragon has called on the government to allow specialist mortgage lenders to be allowed to tap into state schemes giving access to wholesale funding.
The buy-to-let lender said existing government initiatives designed to improve the flow of credit to consumers were excluding non-bank lenders such as itself that do not take retail deposits.
Paragon is virtually closed for new mortgage business (apart from remortgages) because it is unable to access the wholesale markets to provide funds for new loans.
Nigel Terrington, chief executive, said there was a growing demand from professional landlords to take out new loans and snap up bargains in the housing downturn.
“We estimate that there has been a 95 per cent fall in buy-to-let mortgage products over the past two years,” Mr Terrington.
10 Comments
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1. little professor said...
“And there is a latent demand from professional landlords who see opportunities out there.”
Paragon deals with professional landlords who typically have 10 properties. They took up about 20 per cent of new mortgages in early 2007.
The company saw total loan advances drop sharply to £69m in the period, a fraction of the £987.6m granted a year earlier.
The lender said it was trying to compensate for the decline in lending revenue by generating other income streams such as buying mortgage loan portfolios or managing loan books for third parties. It has also continued to trim costs.
2. paul said...
Honestly, do they seriously think that any Tom Dick and Mohammed can just tap the taxpayer for money when they're a bit short?
I used to work opposite their offices and I always thought they were emblematic of everything that had gone wrong about the mortgage market. They can't claim to be the architects of the pyramid scheme that the mortgage market turned into, but they were definitely foremen.
Para-going going ...
3. crunchy said...
Banks won't lend but Paragon with there leveraged BTL customers know better.
I sense this is about liquidity, nothing more. Does West Bromwich ring any bells?
4. doomwatch said...
They already have. Hazel was their first customer, recieving extra special discounts.
5. peter_2008 said...
BTL want Taxpayer subsidy? Wow! So in the words of the great General Taylor from Good Morning Vietnamm, I say to Paragon “I thought you were a little crazy. But you're not crazy, you're mean.”
I believe even NuLab would figure out this is not the most cost effective way of buying votes. Imagine how many benefit claimants and public servants you can buy off with that kind of money.
6. mark wadsworth said...
What Peter 2008 says. There are far cheaper ways of buying votes. £500 winter fuel allowance for pensioners, anyone?
7. general congreve said...
General Congreve Loans can't tap the market for cheap money to loan to BTL landlords either, can I have some taxpayers money to help me expand my business please?
Although I agree with Crunchy, it's a liquidity issue, Paragon are about to go pop.
8. it_is_going_with_a_bang said...
State funding for parasites? I don't think so. Why on earth would the average voter be interested in helping BTL landlords with 10 + properties increase their portfolios???
9. crash bandicoot said...
I don't really know that much about this wholesale market thing. Are they really unable to access the market or are they just unable to borrow money at the interest rate they would like to pay?
10. mander said...
Nigel Terrington, chief executive, said there was a growing demand from professional landlords to take out new loans and snap up bargains in the housing downturn.
So basicly families can no longer negociate on a house because the buy to let would buy everything up and at any price provided they are not out law or simply not financed with maybe same families savings.
They took up about 20 per cent of new mortgages in early 2007.