Underlying annual profits at Paragon, the buy-to-let mortgage specialist, fell 23% because of higher lending costs and an increase in bad debts.

A sharp rise in the cost of bank loans and falling demand for mortgage-backed securities meant the company found it increasingly difficult to find finance and was forced to cut new lending.

A rise in lending arrears to 0.53% of accounts more than three months overdue added to revenue problems, which led to a fall in underlying profits to £66.9m in the year to September, down from £86.7m in the previous 12 months.

That figure excluded exceptional costs associated with a rights issue, a failed takeover bid and redundancies.

On a pre-tax level, profits fell 41% to £53.1m.

Financial Times, Daily Telegraph