Paragon, the buy-to-let mortgage specialist which virtually went into hibernation during the credit crunch when the wholesale funding markets seized up, has signed a new warehouse funding facility.
The £200m revolving senior secured loan facility has been provided by the wholesale division of Lloyds Bank.
The mortgage warehouse facility will be used similarly to the existing £200m warehouse facility provided by Macquarie Bank, to fund loan originations by the group's buy-to-let mortgage business.
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Interest will be charged on the amount drawn at three month LIBOR (London interbank offer rate) plus 2.75%.
The Lloyds Bank facility is structured with a three-year term to permit drawings and re-drawings in its first eighteen months, or up to 24 months, subject to a capital markets refinancing of part of the facility in the first twelve months.
The group observed that it has form in refinancing these sorts of facilities, having successfully concluded a capital markets securitisation of buy-to-let mortgages in November 2011.
"This additional facility will be used to fund further buy-to-let mortgage lending in a market that has continued to gain momentum, and we look forward to growing this area of our business," said Nigel Terrington, Chief Executive of the Paragon Group of Companies.
Negotiations are progressing well for an extension to the group's existing warehouse facility with Macquarie Bank at the end of the current commitment period in December 2012, Paragon revealed.
Shares in Paragon are trading close to their 52-week high, and have increased four-fold since the nadir of the credit crunch back in 2008.
JH
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