Paragon Bank grew its mortgages loan book by 4.7% in the year to end of September 2023 on the back of strong trading and retention performance, the company has reported.

The mortgages loan book at the end of Paragon’s full year period stood at £12.9bn, compared to £12.3bn at the same point last year.

Overall, Paragon Banking Group reported a record underlying operating profit of £277.6m for the period, up 25.4% on last year.

The mortgages loan book benefitted from good customer retention and robust levels of new lending.

New buy-to-let lending outperformed the market despite challenging economic conditions. Total mortgage originations were broadly flat at £1.88bn, partly due to Paragon’s pipeline hedging policy protecting customers in the pipeline from rate volatility at the time of the mini-budget.

Paragon increased its focus on specialist buy-to-let during the period, with 98.8% of completions classed as specialist, whilst the bank also recorded an uptick in lending on property with an Energy Performance Certificate rating of A-C.

Completions on A-C-rated property stood at £904.6m for the period, up 8.7% on last year.

Paragon’s Mortgages arrears performance remained strong, with arrears on the buy-to-let book finishing the period at 0.34% compared to 0.69% across the broader buy-to-let market.

The division also benefits from low loan-to-value coverage across the book at 62.8%, with Paragon’s landlord customers benefiting from £9bn of equity in their mortgaged portfolios.

Commenting on the latest figures Paragon Bank managing director of mortgages, Richard Rowntree said: “We delivered a strong set of results despite the challenging market conditions. New lending was broadly in line with the previous year, which reflects our hedging policy designed to protect customers as well as our focus on portfolio landlords who remained active in the market”.

He added: “Whilst the overall market was down, we continued to see healthy demand for more specialist buy-to-let propositions, such as Houses in Multiple Occupation, which we are well-placed to serve.”