Paragon prepares £250m loan sale as buy-to-let revives

Paragon chief executive Nigel Terrington predicted a "seminal moment" for the buy-to-let lender today as the firm prepares to bundle up and sell its loans for the first time since the credit crunch.

Securitisation markets froze in 2007 on fears that bank balance sheets were carrying a crippling amount of toxic mortgage debt, cutting off a key source of funding for the lender.

But Terrington has been encouraged by the recent thaw in the market underlined by Santander's sale of £3.75 billion in bonds backed by mortgage debt last week - Europe's biggest such deal since the crisis.

Paragon aims to tap the market itself in the summer, issuing up to £250 million in bonds backed by its own loans. "It will be a seminal moment for us," he said.

The firm, which beat forecasts with a 35% rise in pre-tax profits to £39.5million in the six months to March, has benefited from a boom in buy-to-let lending, which it expects to grow strongly in the second half of the year.

Terrington added: "We have seen pretty robust demand from landlords and a very strong level of demand [for rentals] from tenants as there is a shortage of supply of property in that regard. We see London as being the strongest market in the country."