Although its buy-to-let advances for the year so far are down to £1.1bn from £1.4bn at the same point last year, its pipeline has increased.

At £889m, Paragon’s buy-to-let pipeline was slightly higher than the previous quarter and significantly above its September 2023 figure of £595m.

It confirmed that mortgage lending for the full year is on track to reach between £1.4bn and £1.6bn, in line with previous estimates.

Buy-to-let redemptions increased slightly in Q3, taking the annual rate for the year to date to 6.5%, which remains low by historical standards and well below the rate of 9.4% seen over the same period last year.

The combination of new lending and retention means Paragon’s net loan book has grown by 5% year-on-year, to £15.4bn.

Arrears of three months or more in the BTL portfolio dropped to 44 basis points, from 68 basis points at March 2024.

The lender highlights the new government’s housebuilding pledges as beneficial for the outlook of the development finance sector.

It also confirms that its new mortgage origination platform is set to launch soon.

Chief executive Nigel Terrington says:”We have delivered another quarter of strong performance and progression against our strategic priorities with strong growth across our loan and retail deposit books.

“Margins, costs and credit performance continue to perform in line with expectations, whilst strong new business flows reflect improving customer sentiment and more favourable economic conditions.

“Our multi-year digital re-platforming programme is progressing well, and we will launch our new mortgage origination platform in the near future.

“This customised, cloud-based platform will deliver improved efficiency and customer experience.

“Further technology driven initiatives are in process for subsequent delivery.”

AJ Bell head of financial analysis Danni Hewson says: “Expectation is mounting that a Bank of England base rate cut is imminent and that will be music to the ears of buy to let landlords who have seen profitability squeezed by rising costs.

“Recent figures from UK Finance showed a contraction in the buy to let market and affordability issues have impacted some new applications.

“But Paragon’s latest trading update suggests the market has been resilient and that expectation of rate cuts along with elevated demand for rental properties has delivered an uptick in landlords looking to add to their estates since June.

“New rates announced by Paragon today should stimulate business further a sign that the volatility of the past couple of years might finally be in the rear view mirror.”