UK lender resumes buy-to-let loans

UK mortgage lender Paragon will resume buy-to-let mortgages for landlords after securing new capital, as many people are opting to rent rather than purchase property in a volatile market.

“Demand for rental property has never been as strong,” said Nigel Terrington, chief executive of Paragon.

“A lot of first-time buyers can't get mortgages or don't want to take on a mortgage," said Mr. Terrington, adding that demand for rental properties were fuelled by students and immigrants moving into the UK for work.

The buy-to-let sector symbolises a UK housing boom that has seen property prices triple in more than a decade. The sector plunged during the global financial crisis but has since indicated a sign of recovery.

Paragon said it would resume offering buy-to-let loans after acquiring 200 million pounds worth of senior secured loan facility.

The facility, which will be provided by Macquarie Bank and rated by Fitch Ratings, will be available for a four-year term to Paragon Fourth Funding Limited, and interest rates will be computed on the amount drawn at one month LIBOR plus 2.875 percent.