Paragon, the specialist buy-to-let mortgage lender, has estimated total advances for new mortgages for the first half will be about 50% less than a year ago as it grapples with the credit crunch and its own financing issues. Financial Times

First-half profits will be hit by a £10m charge relating to the costs of Paragon’s recent £287m rights issue and staff redundancies.

In February Paragon became the first UK mortgage lender to undertake a steeply discounted rights issue because of the credit squeeze.

The UK’s third-largest buy-to-let lender was unable to complete a securitisation with the capital markets virtually closed. It warned that without the funds, it could have gone into receivership.

Since the end of its financial year Paragon has cut about 30% of its staff.