TSLE: Pepper Money eyeing PT offering this year – Barnard

Speaking at The Specialist Lending Event in Birmingham earlier this week, Rob Barnard (pictured), intermediary relationship director at Pepper Money said product transfers have been “really good for the broker market” over the past three to five years, adding that they have been a “really good source of steady income”.

Barnard said the lender hadn’t focused on product transfers initially because as when it entered the market, it wanted to get to “traction and scale”.

He said a product transfer offering was “not greatly affected by funding” but Pepper did have to consider funding and what it could do to moderate contracts if they do offer this. Barnard said this was what the lender was “doing at the moment, but we will have a PT offering this year”.

In a statement to this publication, Barnard said the retention product it launched at the end of last month was the “start of Pepper’s journey in evolving its offering to better serve existing customers”.

“In many ways, it’s the first step towards enabling Pepper customers to seamlessly transfer their mortgage to an alternative product within our range. This will support more customers who are nearing the end of their term by providing enhanced options to help meet their evolving needs and we will continue to involve brokers in the process,” he added.

In the same statement, Barnard added that the lender planned to reintroduce its limited company offering in the future, but it did “not have a definitive timeline at present”.

“Our core focus at the moment is helping underserved residential mortgage customers, such as hopeful homeowners (first-time buyers) and the self-employed, along with customers with adverse customers with adverse credit,” he noted.

Barnard pointed to its Specialist Lending Study, which found that more than three quarters of self-employed workers said their status made it more difficult to be approved for a mortgage.

He said the study showed 36 per cent of first-time buyers thought the biggest challenge was saving for a deposit, and nearly a quarter worried that they would not be able to borrow enough and 15 per cent said it was their poor credit record.

More customers with credit blips means more need for ‘rehabilitation lender’

Barnard said that as a lender, he found that if someone has always paid their mortgage “they will do whatever they can to continue paying that mortgage”.

Using a spinning plate analogy, he said that customers would “put all their energy and effort into spinning that mortgage plate”.

“I think suddenly whilst people are working so hard to spin that mortgage plate, you’re going to find one or two of those other plates falling down and just because one of those plates falls down it doesn’t mean that somebody shouldn’t get a mortgage at a decent rate,” he commented.

Barnard continued: “I think the specialist lending space will grow. I think the high street’s appetite will tighten and that’s always difficult because you can’t say it’s just tightened criteria, it might simply be tightened credit score.

“So, I think little blips on your credit file before you have a default or a CCJ [county court judgment] already. There will be more and more of those around sadly.”

He said that just became someone had a blip on a credit file did not mean they had to be specialist customer forever.

“Use them [specialist lenders] as a rehabilitation lender. I don’t expect somebody to come to me and stay with for 25 years. They’re going to rehabilitate, they’re going get themselves back in really good shape, and then get back to the high street in two years.

“Use specialist lenders now because it solves that problem now, but don’t think that’s where they’re stuck for the rest of the mortgage life,” Barnard explained.

He added that getting clients back on the high street was a “really good opportunity” to revisit that customer on a regular basis.

“There’s never been more need for you to stay in regular customer contact. Don’t just wait till two months before the big day comes up. Send them a newsletter, do something that keeps you in touch with them because the scary fact is the vast majority of product transfers go nowhere near the originating broker.

“Make sure you’re making that first contact because if you’re not I guarantee the lender will,” Barnard noted.

‘Don’t be afraid’ of debt consolidation and second charge

Barnard said debt consolidation and second charge were a “little taboo in the industry and maybe shouldn’t be”.

He said Pepper was seeing the amount of unsecured debt increasing, such using buy now pay later more frequently or upping credit card usage, and that these two solutions could be very helpful.

“If it’s sold by the right people to the right people for the right reason that consolidation can be really sensible, providing you can pick the right product and the price is right.”

Barnard said that he thought second charges would grow, pointing to someone on a five-year fixed rate with a high street lender with a low rate beginning with two or one.

In that scenario, Barnard said it did not make sense to change to a specialist rate when they can borrow the money they want on an “incremental rate”.

“Don’t be afraid of them, seconds are as simple to write as a first, and work with specialist distributors,” he added.

The Specialist Lending Event continues next week with events in Wetherby and Bolton. If you are interested in attending follow this link. 

The views of the panel members do not necessarily reflect the views of the individual’s company