Non-bank lender Pepper Money has announced the introduction of a new package of loan options to help address the challenges faced by brokers and their customers in the current market.
The “Red Hot Rates Package” aims to provide fast relief for borrowers accessing Pepper Money loans by slashing interest rates from 50 to 164 basis points, lowering serviceability buffer rates to 2% across the board, and providing response times with same day turnarounds for submissions lodged before 11am AEST.
Other measures include 40-year loan terms, fixed rates with no break costs, and the ability to pay interest only for up to five years.
Loans will be available up to 85% lend with no LMI and risk fees for prime customers, while negative gearing will also be considered for investors.
Pepper Money said the loans would also cater to a “broad range of acceptable incomes”. There are no cash out limits (subject to LVR and lending limits) and no limit to the number of debts to consolidate, including business and tax debt.
The lower interest rates are across all LVRs for commercial real estate and the majority of LVRs for Pepper Money home loans. The reduced rates are available for a limited time, from August 7 to October 13. Asset finance loans are not included. The reduced serviceability buffers are permanent changes effective from August 7, 2023, and apply only to home loans. Commercial real estate and asset finance is not included.
With current conditions creating a considerable squeeze for borrowers across the board – from those feeling financially stretched by higher interest rates and inflation, to those that are frustrated by investment barriers – Pepper Money said it understood that brokers were looking for fresh solutions.
Pepper Money CEO Mario Rehayem (pictured above), who recently spoke with Australian Broker on this issue, said the current challenges for brokers and their customers required a response from lenders, with the likelihood of more challenges to come.
“Australians are under pressure – persistently high inflation and interest rates are putting pressure on household budgets, and in many cases creating mortgage stress in addition to other cost of living challenges,” Rehayem said. “We are unlikely to see rates ease until 2024, suggesting the road will continue to be bumpy for borrowers for some time.”
“In times like this, Pepper Money understands mortgage brokers need extra support to help cut through the noise, navigate the options available, and provide tailored solutions for their customers. We know everyone’s situation is unique and different, and having the flexibility to find a way to make it work for your customers is important.”
Rehayem said the levers act as a collective aid, creating a bridge for customers and providing relief against the impacts of inflation and cost of living.
“Broker businesses today are an always-on model,” he said. “Brokers cannot gravitate to being reactive and need to understand all the levers they can pull in their business when it comes to diversifying their available offering.”
“At Pepper Money, we have listened and made changes because we have seen the need and responded for the benefit of brokers and their customers.”
“True to our mission to help customers succeed, we are taking a flexible yet balanced approach for qualifying new and existing customers looking to access lending to help improve their situation.”
The RBA has held rates at 4.10% for the second month in a row but has warned that more interest rate hikes would be likely as inflation sits at 6%.
Rehayem said in this environment, it was “nerve-racking” to be a borrower, and brokers wanted to do all that was possible to help customers through this time.
“Pepper Money is focused on doing more than just tackle rates, we are focused on having various policies that can help alleviate the stress some Australians are under. We want all Australians to remain in their homes and are offering pragmatic, real-life policies to help achieve that,” Rehayem said.
“Pepper Money’s BDMs can help brokers to find a serviceability solution for their customers. We make it easy. Our Pepper Product Selector can provide an indicative response in under five minutes, and we have an accessible credit team who are always ready to workshop any scenarios.”
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