Paragon Banking Group has tracked an improvement in developer confidence over the six months to the end of March 2024.
The lender’s development finance new business pipeline grew to £186.4m, up from £154.3m reported at the end of September last year.
The development finance business has expanded into the build-to-rent market in addition to its existing offering across the purpose-built student accommodation sector.
Paragon has tracked a 19% increase in undrawn balances on development projects in progress to £481.5m over the same period.
New lending during the six months stood at £243.8m, with a broader geographical spread when compared to the same period last year. The proportion of new lending in London and the South East reduced to 49%, down from 54% as of 31 March 2023.
Elsewhere, Paragon has tracked an increased developer interest in sustainable lending schemes, resulting in the extension of its Green Homes Initiative from £200m to £300m. The scheme incentivises developers to build energy efficient homes through financial discounts.
Development finance is one of the businesses that comprises Paragon’s commercial lending division, where overall volumes were slightly higher than their 2023 level at £589.8m.
Neal Moy, Paragon’s development finance managing director, said: “Coming out of a challenging 2023 for the market, we are seeing an increase in proposals from developers, leading to an expansion of our new business pipeline.
“Developer confidence is improving as economic volatility dissipates and some of the supply chain and labour issues that marked the post-pandemic world ease.”
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