Shares in Paragon Banking Group PLC (LSE:PAG) fell 9% on Tuesday after mortgage volumes disappointed in its latest update.
Home loan advances for the period were £1.1 billion, marginally higher than last year, and for the full year. But, they are expected to come in at the lower end of guidance after earlier disruption from changes to stamp duty.
The company said its loan book grew 4.8% over the past nine months, reaching £16.2 billion, with retail deposits also increasing by 1.5% during the quarter, helped by strong uptake of its new Spring app.
Commercial lending volumes rose 6.6% year-on-year, but net advances dipped due to repayments on revolving credit facilities. Credit quality remains broadly stable, with arrears on buy-to-let loans only slightly up.
Paragon’s capital ratios were largely unchanged. The group left most guidance for the year intact, but now expects mortgage lending at the bottom end of its previous range.
Shore Capital, downgrading its recommendation to 'hold' from 'buy', said overall, trading was 'robust'.
However, it noted that 'mortgage volumes were a little softer than management anticipated in the period post the April stamp duty change'.
The shares fell 84.5p to 867.5p.