'Grey area' filled with move to pre-GFC lending

by Adam Smith13 Apr 2012

Pepper has said its new product range will fill a “grey area” in the market where consumers have been missing out.

The lender yesterday announced a 'PLUS' product range, an extension of the Flexi Advantage and Self-Employed Advantage product lines that are currently on offer to brokers, as well as changes to its existing product range. Pepper director of sales and distribution Mario Rehayem said the products were released in direct response to broker demand.

“What triggered this was our broker survey. Over 85% of respondents asked for a bit wider spread on our credit,” he said.

Rehayem said changes to the lender's existing products, along with the new product releases, took the company back toward its product offerings prior to the GFC.

“All the product releases we’ve had going for the last 24 months have been products that we offered prior to the GFC. Obviously, post-GFC we tightened up again just like every other lender. We just want to go back to where we were; not to no-docs, obviously. Those are a thing of the past,” he said.

Low-doc consumers are also moving back toward their GFC positions, Rehayem said. Many self-employed or non-conforming borrowers are now in a better financial position, increasing the demand for specialist lending products. And as this demand returns, Rehayem said Pepper was moving to meet it with its new product range and policies.

“The consumer demand has always been there, but it’s also been triggered by other lenders. As we have more majors and other lenders tighten up their policy, brokers find there is nowhere to place certain clients. Then what happens is brokers stop accommodating demand. It’s a grey area in our industry, and we need to ensure we cater to all where there’s a suitable deal to be written,” he said.

While the lender has relaxed its LVRs and credit while expanding maximum loan amounts, Rehayem was confident that the business being written remained sound.

“We know from trend patterns that we’re safe writing what we write. In my opinion, we are market leading with regards to arrears, so we can be a bit more flamboyant in our offering knowing that we’re not in uncharted territory. We’ve been doing this for 10 years,” he said.

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