Focus Paragon

Mortgage and loans company Paragon is toasting the housing boom and the public's continued willingness to borrow which have helped it to enjoy a 35% surge in pre-tax profits.

Its share price has been falling since the summer but yesterday jumped 14.5% to close at £2.25 after impressing the market with its strategy.

Paragon is one of the leading players in the "buy to let" market, where investors buy properties hoping to make a killing in the rental market.

This has suffered a decline during recent weeks as a result of a flood of properties coming on to the market, causing rents to fall.

But, despite the exit of many amateur landlords from the buy-to-let market, the company is optimistic that its focus on professional landlords will continue to pay off.

In the past couple of years the company has been diversifying into the world of consumer credit, concentrating in particular on car finance and personal loans.

Its car loan operation began trading just two years ago and now has around a 1% share of the £7bn market.

Operating through 1,300 dealers, Paragon Car Finance advanced loans of £64m in the 12 months to September 30, up 79% from a year ago. The results underline the company's dramatic turnaround in fortunes since the dark days of the early 1990s.

In 1991 Paragon - then named National Home Loans - almost collapsed under a mountain of arrears following the end of the last property boom and had to be rescued by the Bank of England.

Its share price collapsed from £13.81 in March of that year to just 12p in September 1992. Anybody who bought then is now enjoying an eighteenfold increase in their investment.

Its large mortgage book from the late-1980s lending frenzy was for years something of an albatross around the company's neck, but the rapid recovery in the housing market in the past year or two has wiped out much of its former debt problem.