Buy-to-let mortgage lender Paragon is poised to start lending again after it obtained ₤200m in funding from Macquarie Bank.
The move could indicate a revival in the buy-to-let market which was badly hit by the global financial crisis. Paragon's optimism on the buy-to-let market hinges on the belief that landlords can purchase properties with high rents at a discount.
According to the British Bankers Association, the number of first-time buyers in the property market has fallen. This is likely to translate into higher demand for rented properties. Demand in the rental property market was has so far been propped up by students and immigrants.
Paragon has formed a unit to warehouse the loan from Macquarie Bank. Mortgages will be issued through this newly-formed company. The company intends to securitise and sell the mortgages in four years.
Paragon now expects a profit which will exceed market expectations.