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| CURRENT SECTION :: Money News | UK's most visited IT Contractor Site - 250k unique visitors March 2008 |
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Fears that new buy-to-let mortgages will be much harder to come by for Britons looking to invest their cash have been realised. Paragon, one of the biggest buy-to-let mortgage companies, expects the value of loans it has made to new investors to halve, as a result of the “difficult credit environment.”. Although private rental prospects remain “strong” in the long-term, it said its funding to new clients last month will be “some 50% less” than it was at the same time last year. Given it had an emergency injection of £287m, Paragon predicts an overall profit hit of £10m, which includes the cost of redundancies, due to affect 30% of its 750-strong workforce. It blamed the credit crunch for its troubles, and pointed to the difficulty in securing cheap money as “impacting the workings of the money, banking and capital markets.” Coupled with no warehouse finance, the result is its funding for new lending has been “limited” and, “particularly in the buy-to-let businesses,” has been “managed down”. Last October, Paragon lent about £300million to its buy-to-let clients, but last month its lending fell to about £60million. Yet in a trading update, it predicted the gloom would lift. “We continue to expect a return to market stability and to more normal lending activity by the group in due course,” it said. In the meantime, the company plans to continue to review its “resource requirements” and maintain a “prudent” management approach to the servicing of its loans. The news comes as a flood of buy-to-let properties are tipped to the hit market next week, as investors will sell off their investments to make the most of the drop in capital gains tax, from a typical rate of 40% to 18%, which takes effect from Sunday. Apr 3, 2008 Email this article Printer friendly page Previous Page
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