Round-table
MBE 2012 Round-table:
A changed landscape
With fierce competition in the bridging market will lenders start to look at riskier business to take market share? Our panel discuss bridging borrower profiles
Bridging lenders say short-term finance is no longer non-status lending of last resort to sub-prime customers; more often than not it’s development finance for business purposes. But who exactly are bridging lenders lending to now?
Mel Fordham: the people that bridging fits for are the developers or entrepreneurs who see business opportunities in buying property. the traditional lenders refuse to listen to an argument in favour of lending and so those avenues of finance are gone. there’s one bridging lender we’ve secured funding from with attractive loan to value and rates where you can buy a property and turn it for a profit without months of wrangling with traditional lenders. that for me is where bridging fits. that flexibility, that pragmatic approach. Steven Nicholas: certainly over the life of our business the type of client we lend to has changed from pre-Lehman’s to post-Lehman’s. they seem to be more professional in their business of making money out of property. Some of the people we lend to probably have more in assets than we have but in terms of cash flow there’s nowhere near as much liquidity out there. Whatever
22 bridging intrOducer MAY 2012
banks say, there is a reluctance to lend. Our profile has changed from an adverse profile client to a highly respected developer with a lower LtV. it’s changed from around 100% to 65% LtV. it’s good clean business and much safer as well. Martin Gilsenan: these are good financially savvy customers who have been marginalised in a post- Lehman’s world. the mainstream market can’t cater for them and it’s where the bridging market has grown in stature to meet their needs.
Gareth Lewis: they’re the dream client that you’d salivate over pre- credit crunch because they were the cream of the crop and not last resort.
If you’re not lending to vulnerable individuals anymore is the Financial Services Authority right to be worrying about the bridging sector then?
MF: From my perspective history tells me the FSA has a long catch up period before the supervisor that visits the lender or the broker really understands the type of lending that’s being brought about. i could sit here all day talking about visits by FSA inspectors where they have failed to understand the
industry they’re trying to regulate by a country mile, it’s shocking. if that’s the same problem that’s overlaid on to bridging then that would be the impetus behind everyone at this table getting their heads together to make sure we are galvanised and we can prove to the regulator that we are capable of self-regulation. Carl Graham: it is important to know that bridging finance is business finance. unless the FSA was going to regulate commercial mortgages and buy- to-let mortgages, how can bridging finance ever feature under a regulatory banner? GL: i think you can now get more comfort from who at the FSA is looking at bridging and how, than just after M-day when certainly what i saw was different people coming into the business of trying to understand bridging and every six months it was a different person. now you actually have someone who has been looking at the bridging industry for a period of time and is now trying to seek to understand it.
Is the reason the FSA is worried about bridging because it’s looking at legacy issues and customers who are stuck
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