Buy to let mortgage lender reduces lending
January 23, 2008
Recently the Nationwide commercial division announced that it would be limiting its lending by not lending to new clients and not taking on broker referrals, focusing instead on existing borrowers. One official stated: “I am using market conditions to be very selective about the type of lending we do. There is an enormous appetite out there for borrowing, half of my competitors have disappeared and a lot of people are looking for finance.”
It seems that a similar stance is now being taken by Paragon, the specialist buy to let mortgage lender, which has announced that it will now have to limit lending and focus on existing customers rather than lending to new borrowers. The limit on new lending is due to come into effect from the end of February according to a recent report. Restrictions will be placed on the amount of money the company will be lending to new customers until the money markets loosen up.
The lender relies on the wholesale money markets to fund its lending, and like other lenders is experiencing difficulties because of increases in inter-bank lending and problems with raising funds, which is why it is being forced to restrict lending to new borrowers. However, officials from Paragon, which is the third larges buy to let mortgage lender in the UK, have stated that service levels to existing customers will be maintained.
The chairman of Paragon said that he was hopeful that “the rights issue will provide Paragon with a platform from which it can pursue further funding, so the company can return to writing significant volumes of profitable business when credit markets reopen”.
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