With Andreea Dulgheru, deputy editor (print) at Medianett Publishing, asking the questions and Tanya Elmaz, director of intermediary sales for commercial finance at Together, joining her at the head of the table, they invited the panel to discuss what brokers and borrowers should look out for when selecting a lender for more complex requirements.

Panellists included Laura Toke, bridging relationship director at SPF Private Clients; John Hardman, managing director at Fluent Bridging; Tom Frank, director at Ice Cubed Property Finance; and Joseph Aston, sales and commercial director at Aria Finance.

The roundtable began with a discussion on market challenges, with Tanya on hand to set the scene over the past year.

She explained how the past nine months had seen a lot of uncertainty around interest rates, which changed how people used bridging finance.

“We've seen mainstream borrowers look to bridging where they might not have before, so that opens up a different type of avenue,” said Tanya.

Laura agreed and pointed to the cost gap between BTL mortgages and bridging is “ever narrowing”.

“Last year after the mini-Budget, we had a lot of turmoil within the mortgage markets; while interest rates were very volatile, bridging remained quite stable,” she stated.

“Yes, [bridging] lenders had to increase their rates, but it was marginal compared to the increase in mortgage rates.

“[The rates are] not very different from a limited company BTL product, but it has no early repayment charges and it’s a lot more flexible.”

According to Tanya, some BTL landlords have looked to secure bridging finance first for certain projects.

This is where John expressed the need for lenders and brokers that can “think outside the box” and make borrowers aware of “all the options”.

When it came to the most popular bridging uses, Tanya said chain breaks are still up there, along with mortgage delays, refurbs and auction purchases.

“Business loans are another reason why people have been using bridging finance; it's efficient, speedy and easy,” she continued.

Tom also highlighted that traditional ground-up developers had been looking at more refurb-based [projects], because there's “more certainty of costs”.

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In response to a question about what a borrower should look for when selecting a broker and/or lender, Tom expressed how intermediaries — as an information point — are becoming “much more important” now than ever.

He said this is because there is now more understanding of the pitfalls of bridging, and it’s those nuances at the end of the term — such as how open a lender is to extend and the costs involved — and the comparisons of costs incurred by fixed or floating interest rates, that clients will rely on brokers to inform them of.

John brought up the imminent change in consumer duty, which he predicts will be “one of the most positive impacts on bridging finance that we've had for many years”.

“There should now be an arrow straight line for a consumer to make a completely informed choice as to which broker they should use and why, and also which lender and product they should use,” he added.

Consequently, John thinks this will drive “huge behavioural change” from both intermediaries and lenders alike, which is “ultimately good for the consumer”.

When looking to the future, Tanya — who highlighted how the bridging market has expanded to £6.8bn, with applications rising quarter on quarter — predicts a reduction in LTV’s and loan sizes, along with longer terms.

“I think what we’ll see is a continuation of growth in the market as more mainstream borrowers come in,” she said.

Tom doesn’t believe the sector has yet seen the expected changes to the property market as a result of the interest rate rises, but anticipates a rise in auction sales and development exits when we do.

John forecasts an increase in first-time applicants and smaller loan sizes as growth areas for this year, while Laura would like to see more lenders operating in Scotland, which she said has a good market — but not as much choice.

All members of the panel expressed how important it was to focus on education.

“We need to educate brokers, and brokers still need to educate borrowers,” urged Tanya.

To find out what other changes our panellists have seen in the market and what they think the future of bridging holds, watch the full video, below.