Increased competition for lenders, more product choice and Paragon’s success in securing funding from the wholesale markets have all been tipped as positive for the mortgage market.
Andrew Montlake, communications director at London-based broker Coreco, said the lender’s re-entry was a “great boost for brokers and the buy-to-let market”.
“This is great news just at a time when we desperately need more consumer choice,” he said. “It’s really important we get more lenders and more competition back in the market and especially big name lenders like Paragon which were virtually synonymous with buy-to-let being back is fantastic.”
Mike Fitzgerald, sales director at broker Brentchase Financial, said: “It’s good to see them coming back. We do a lot of buy-to-let and it’s important that there are a few more products out there, but much more important is the message it sends to other lenders about the market.
“Whilst there’s not going to be a rush of new lending in that sector there are some signs that there are little green shoots. I’ve known Paragon a long time and they do know their market. They’ve obviously seen that there is a market for good buy-to-let business and I bet this will tempt one or two lenders back as well. Let’s hope it works.”
And Ray Bohringer, director of Essex-based broker Obligo, said: “It’s great news that they’re back in the market. I would say that their product will appeal to a fairly limited market, but that said, any lender coming back with product at all is good news for the industry. More importantly, if funds are becoming more available that’s good news for the market all round. Fair play to them.”
LENDER REACTION
Lenders reacted positively to the news that Paragon was back.
The Council of Mortgage Lenders said that although it didn’t usually comment on individual lenders in this way, it was good news that Paragon is lending again.
A spokesman said: “Clearly it’s encouraging to see Paragon back in the market. Having just reported the top 30 lenders in the market and seeing that new lending is concentrated in the hands of a few, any lender committed to doing new lending is something we would welcome.”
Colin Snowdon, chief executive of Aldermore Mortgages, said he was genuinely “delighted” to see another lender join the fray.
“I think it’s a really positive development for the market, for the buy-to-let sector and for intermediaries who are involved in it,” he told Mortgage Introducer. “It’s a delight to see them back and I think it’s testament to how they’ve done things for years, that they’re the first lender back in the market.”
Snowdon also said that Paragon’s success at securing funding was “a good sign” for the wider market adding: “Whilst the funding markets have a long way to go, Paragon and Precise Mortgages having funding from the wholesale market shows that it’s at least possible.”
And Alan Cleary, managing director of Precise Mortgages, said it was good news for the market that Paragon was back in the game.
“The credit crunch disproportionately affected the buy-to-let market so it’s really good to see a good injection of liquidity into this market,” he said. “I think everybody wants more competition – it will make it more sustainable and more legitimate.”
LANDLORD REACTION
David Salusbury, chairman at trade body the National Landlords Association, also gave Paragon a warm welcome back.
He said: “The company’s new product range is excellent news for the private-rented sector, which has witnessed a dramatic decline in buy-to-let products since 2007.
“An increase in the availability of buy-to-let mortgages will stimulate the private-rented sector into playing a bigger role in providing a much-needed alternative to owner-occupation during these difficult times.
“It is to be hoped that this good news from Paragon will not be negated by the anticipated cuts to housing benefit, which could adversely affect investment in housing for rent and the supply of affordable accommodation.”
David Brown, commercial director of LSL Property Services, also said that Paragon’s return would be welcome news for investors.
“The re-entrance of lenders like Paragon should give professional landlords hope that the lending market is beginning to loosen and that more funding is becoming available,” he said, adding: “The private rental sector plays a pivotal role in housing the UK’s growing population, and an increased availability of mortgage finance would allow the sector to grow to cover the UK’s shortfall in affordable housing.”
