Pepper Money launches second series of The Specialist podcast

In the first episode of the second series, Laurence Morey (pictured), chief executive of Pepper Money, said that, over the course of his career, the specialist lending space was “littered with mainstream lenders seeking to execute in the specialist space and getting it wrong”.

He explained: “The challenge with respect to mainstream lenders doing this is scale. The specialist market is of a particular scale.

“We’re one of the largest players and our origination run rates are around of £2bn a year as we entered into this crisis, so it gives you a sense of the size of our business and we’re probably the second or third largest player in this market.”

Morey continued that he didn’t “necessarily see some of the very large high streets entering the space” due to the “scale of the opportunity” and especially as lenders would want to enter the market in a “considered and well-managed way”.

‘High degree of confidence’ in non-bank lending model

Morey said that there were similarities between the mini Budget and the financial crisis as pension funds and asset backed securities (ABS) funds had to sell large quantities of asset backed securities, which are mortgage bonds that are created when mortgage lenders securitise.

However, he said that it was not as “far ranging” or as “long lasting”, which was “good news”.

“What is extremely helpful from my perspective and gives me a high degree of confidence about the robustness of the non-bank lending model was to see the market solving its own problem without having to revert to the government or the central bank to solve it.”

He added that while the Bank of England had to step in and offer a facility that was to bring “price stability”.

He said: “The total quantum of what they bought I don’t think was material relative to the rest of the sell down that happened in the market.”

Second charges set for growth

Morey said that the “biggest driver for growth” in second charges would be to assist customers in ordering their cash flow.

He explained that as an example if a borrower took on a series of credit cards, had a car loan and then there was an unforeseen expense such as a boiler breakdown, then second charges could really help.

Morey said: “Where the second charge loan has real application through the lens of a cost of living crisis, is that we’re able to take what are relatively  expensive monthly payments and reschedule them over a longer period at a lower rate of interest that helps you bring normality to your current cash flow.

“There is real utility in that product. It doesn’t speak to a customer who’s being reckless and it doesn’t speak to a customer who needs help from an adverse credit perspective. It just simply that from time to time in life, we will incur costs that we don’t see coming,” Morey added.

He said that, from the lender’s perspective, the “path for exit” was not that a borrower remains a second charge customer for 20 years, it is that the first mortgage is refinanced and then the two loans are combined, most likely through a high street lender.

The episode also discussed arrears and forbearance support, growth of specialist borrowers, swap rates and specialist lender pricing as well as specialist lender funding models.

Upcoming episodes

Future episodes will feature Richard Merritt from Simplybiz talking about the Mortgage Climate Action Group and the green issues facing the industry and a customer talking about how their broker, working together with Pepper Money, helped them secure the mortgage they needed where others had previously failed.

There will also be a special episode for International Women’s Day featuring Pepper Money’s proposition director, Samantha Da Silva, and Sesame Bankhall Group’s Steph Charman looking at broker and customer wellbeing whilst Legal and General Mortgage Club’s Danny Belton will also guest on the podcast.

Rob Barnard, intermediary relationships director at Pepper Money and podcast host, said: “The Specialist is the perfect name for our podcast, as we’re such a diverse specialist lender. Our guests are from really varied backgrounds, so what you’ll find is we spend a few minutes at the beginning of each episode getting to know them and getting under the skin of what they’re really like.

“Then we discuss their areas of expertise, so that they can share their experience, much of which we think will benefit our broker listeners. The episodes are all around 20 minutes, so they are short and punchy. It’s very informal but very informative. It’s our aim to get the facts across but keep it light hearted.”

He continued: “It’s my mission to keep the podcast relevant and helpful, talking about real topics that are pertinent to brokers, like the green agenda or inclusivity in finance. Above all, we want to continue to be engaging and relevant, and have a little bit of something for everybody.”

The previous series of The Specialist podcast had seven episodes, including a Christmas episode.

Podcasts can be found on Spotify and Apple Podcasts.