Paragon sales rise 47% in 'buy to let' boom

The "buy to let" mortgage boom has boosted first-half profits at Paragon by 32% to ?14.7m. Eight years ago the company, under its former name of National Home Loans, almost collapsed in a mountain of arrears following the last property upturn.

Paragon's mortgage lending jumped 47% in the six months to the end of March. Chief executive Nigel Terrington said "the vast majority" was to people investing in property to let.

In April, surveyors FPD Savills warned of instability in the buy-to-let market, but Mr Terrington said a repeat of the bad debt problems which had plagued NHL was unlikely.

"We are lending to people who have surplus cash and very high credit ratings, rather than first-time buyers strapped to the limits. We lent ?122m in the last six months, whereas there were times in the NHL days when ?122m was a quiet month," he said.

Paragon still manages ?580m of the former ?3.8bn NHL loan book, much of which is in arrears. Mortgage holders are being charged a variable interest rate of up to 11%, compared to Halifax's 6.85% standard rate.

In the last two years Paragon has diversified into other activities, including the ?25m purchase of Universal Credit from Lloyds Bank. Shares rose 5p to close at 226.5p - and are up sharply since a 12-month low of 125p last October.