The Solihull-based firm's funding was hit by the crunch in debt markets last year, cutting its lending levels by more than half to £987.6m, but said it expected a return to market stability `in due course'.
The firm said: "We expect tenant demand will continue to increase, as uncertainty about the housing market and the economy generally augments the broader social and demographic factors which have been behind the increase in rental demand over the longer term."
Professional landlords will look for bargains to take advantage of weaker house prices and higher rents, it added.
Profits for the six months to March 31 fell 39 per cent to £26.4m, although this result includes the costs of a £287m rights issue. The group was forced into the cash call in January to repay a £280m bank facility, but has since entered the second half of the financial year in a `strong financial position'.
Paragon added that bad debt charges as a percentage of customers remained at 0.3 per cent, the same level as last year.
It added: "The loan books continue to be carefully managed and the credit performance remains in line with our expectations."
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