John Heron, director of lending, said the three drivers behind the increase in profits were the quality and low arrears rate of its buy-to-let back book underpinned by guaranteed low rates, the rebuilding of its buy-to-let lending proposition and its acquisition activity involving the purchasing of portfolios of loans.
Heron said: “The performance of our existing mortgage book is outstanding and given that our customers receive very low mortgage rates guaranteed in their mortgage contracts and underpinned by the securitisation programme they simply don’t redeem.
“The annualised redemption rare for the existing book of mortgages is 2.2% which in my career that is the sort of redemption level that is unheard of.”
Paragon’s buy-to-let lending increased by 45% to £184.3 million advanced compared to £127.0 million in 2011.
A further £4.6 million of loans were made to existing borrowers in respect of further advances which took a slight dip from 2011 figures of £5.8 million.
The total value of completions under the group's new products since the recommencement of new lending in October 2010 now stands at £311.3 million.
And the pipeline of applications and offers outstanding totaled £129.9 million at 30 September 2012 which has increased from £67.5 million in 2011.
The rate of arrears was 0.48% which remained better than the comparable market average of 1.51% as recorded by the Council of Mortgage Lenders.
Despite an improved arrears performance the impairment charge attributable to First Mortgages, which includes the buy-to-let and owner-occupied first mortgage assets and other sources of income derived from first charge mortgages, increased to £12.4 million for the year from £5.6 million for 2011.
The report stated that this was a return to normal levels of provisioning after a low level of charge last year and followed an increase in receiver of rent activity, where a charge for impairments may be made for accounts that are less than three months in arrears.
Heron said Paragon always tries to resolve arrears situations to everyone’s benefit and has found the receivership of rent process to be key in keeping tenants in properties and giving landlords back control when their financial position has recovered.
He added: “The group intends to concentrate on safe sustainable growth for 2013.
“We have a strong capital base and are well-funded which gives us a platform on which to grow our buy-to-let lending through our Paragon Mortgages and Mortgage Trust brands.”
