Credit crunch hits Paragon profit

Paragon has seen a reduction in buy-to-let activity

UK buy-to-let mortgage lender Paragon Group has reported a 43% fall in annual pre-tax profits to £53.7m ($81m) following the credit market turmoil.

Paragon slashed new lending by 75% to £1.13bn in the year to 30 September after its funding costs soared.

The company, which specialises in lending to landlords, said 0.53% of its mortgage accounts were in arrears - a three-fold increase from last year.

The figure is still below the industry average, which stands at 1.71%.

"It is unlikely that credit markets will recover in the near future, thereby making the timing of our return to new landing in scale uncertain", said Paragon's chief executive Nigel Terrington.

The company said it was well capitalised, with no debt due to mature until 2017.

Paragon urged the government to press ahead with measures to kick-start credit markets and boost mortgage lending.