Paragon Bank increased its development finance loan book during the first half of its financial year, despite ongoing challenges across the housing market and a difficult trading environment for SME developers.
The lender reported that its development finance loan book reached £921.1m in the six months to 31 March 2026, up 5% from £877.5m recorded a year earlier.
New lending within the division totalled £260m during the period, matching the level achieved in the corresponding period of the previous financial year.
Development finance diversification continues
Alongside loan book growth, Paragon continued to broaden its development finance proposition as part of a wider diversification strategy.
During the first half of the year, the lender launched new products aimed at care home developments, later-living schemes and light industrial projects.
The expansion builds on diversification efforts undertaken in recent years, with the lender already establishing a presence in purpose-built student accommodation and growing its exposure to the build-to-rent sector.
Paragon said widening its proposition allows it to support a broader range of specialist development opportunities beyond traditional residential schemes.
"We have delivered a solid performance in Development Finance during the first half, maintaining new lending at last year’s level and growing the loan book despite ongoing challenges in the housing market and a difficult environment for SME developers," said Neal Moy, managing director of development finance at Paragon Bank (pictured).
"At the same time, we have continued to broaden our proposition into areas such as care homes, later living and light industrial, helping us support a wider range of specialist development opportunities."
The development finance business forms part of Paragon's wider commercial lending division, which also includes SME lending, structured lending and motor finance.
Across the division, new lending reached £645m during the period, compared with £568m in the first half of the previous financial year.
Paragon Banking Group also reported underlying profit before tax of £145.7m for the six-month period. Across the wider business, the group's net loan book increased by 3.8%, reflecting continued growth across its lending operations.
