Pepper Money Launches Near Prime Clear: Offering a competitive price point for emerging customer segment

Posted 21-03-2022


  • Leading non-bank Pepper Money launches Near Prime Clear, in response to the demand and strong growth opportunities in the Near Prime segment.
  • Near Prime Clear offers a competitive price point for the growing customer segment with a generally clean credit history, that sits just outside the traditional Prime lending space.
  • The newly introduced Near Prime Clear product will be available to brokers and business partners from today in Pepper Money’s technology tools, Pepper Product Selector (PPS) and Resolve.

Since pioneering and launching Near Prime mortgages in Australia in 2012, and following a successful pilot program, Pepper Money today launches Near Prime Clear; a new product to meet the increasing demand and growth opportunities in the booming Near Prime category.

Pepper Money’s CEO Mario Rehayem said, Near Prime Clear offers a competitive price point and greater flexibility for a growing customer segment with a generally clean credit history, that sits just outside the traditional Prime lending space.

“These are borrowers who may just be starting out their business, starting out a new job, had a change of circumstances recently, earn variable income, or experienced temporary employment disruptions during lockdowns in industries such as tourism, hospitality, or entertainment over the past 24 months and have clean credit history,” said Mr Rehayem.

“We’re addressing a growing need in the market, by ensuring Australians impacted by real life have access to more competitive pricing,” he added.

Near Prime Clear will be available to brokers and business partners from today in Pepper Money’s innovative and market leading technology tools, Pepper Product Selector (PPS) and Resolve with Full Doc and Alt Doc variants.

The typical Near Prime Clear borrower profile/characteristics:

  • Clear credit history
  • Self-employed or a PAYG applicant that has just started a new job
  • Self-employed customers looking for simple income verification (including one form of income verification such as an accountant’s letter declaration or a one-year tax return)
  • Income or employment history doesn’t quite fit the criteria for a mainstream lender
  • Consideration of family tax benefits such as family assistance payments for dependent children
  • Flexible cash out options for business use and no limit on the number of debts for consolidation
  • Wants to consolidate their tax debt

Last month, Pepper Money reported that the Near Prime category had grown by 100 per cent PCP1 at $2.3bn in originations. According to Mr Rehayem, the record mortgage originations seen in 2021 coupled with the success of the Near Prime Clear pilot, which accounted for 10% of Australian mortgage originations in the fourth quarter, further demonstrates this is a growing sector influenced by the current market conditions.

"The lending landscape has changed dramatically over the past 24 months. Overall, Near Prime lending settlements have accelerated, borrower profiles are shifting, and Pepper Money is well positioned to meet the growing demand through product innovation and our market leading turnarounds,” said Mr Rehayem.

“If one trend is set to define residential lending post pandemic and amid the ongoing economic instability at the global scale, it is that more and more applicants may be denied by their primary – often a big four bank – for simply not meeting their criteria. On the other side of the industry, there’s us, as an innovative digital nonbank lender, as we focus on creating financial inclusion where there are gaps. The Near Prime sector is shifting and booming.

“In some respect, market conditions today mirror those when we first launched the Near Prime category. Increasingly, more and more customers are finding themselves underserved by banks, at a time when they need them the most.

“As we continue to serve more customers than ever before, we’re responding to this growing segment with our innovative home loan options and creating financial inclusion,” Mr Rehayem concluded.

According to Pepper Money’s General Manager Mortgages and Commercial Lending Barry Saoud, “Brokers are responding to the market by turning to Pepper Money on behalf of their customers who are increasingly requiring a more flexible and fast approach.

“The Near Prime space is our fastest-growing sector of mortgage lending at Pepper Money. We are only just scratching the surface of the non-confirming market which accounts for approximately 12%2 of the Australian mortgage market – which itself is around $2tn in size3 so there are significant opportunities for continued growth; that’s why we’re backing brokers and our business partners to meet the shifting needs of their customers.

“Our tech capabilities provide scale and efficiency; enabling us to manage increasing application volumes whilst maintaining our industry leading turnaround times.

“All our investments in our product innovation and technology are being made to help brokers efficiently and effectively cater to more customer segments of the addressable mortgage market,” he said.

“We’ve made it really fast and easy for brokers to find out where their customer fits in Pepper Money’s broad spectrum of loan options through PPS. No other lender in the market today can issue an indicative approval for a near prime loan with a credit check in under five minutes.”

Mr Saoud concluded: “Borrowers will continue to seek out lending solutions for their real and unique life circumstances, so there’s a golden opportunity for brokers to help them do o this. If there was ever a time to offer flexible solutions that meet your customers’ needs – that time is now.”

1 Prior comparative period being December 2020
2 Independent research conducted by Fifth Dimension in Q4 2014
3 Combination of Australia and New Zealand mortgage markets as at December 2021 (Total housing credit, RBA D2 Lending and credit aggregates (including owner-occupier housing credit and investor housing credit)); Housing, RBNZ C5 Sector lending (registered banks and non-bank lending institutions), December 2021, converted at an assumed exchange rate of NZD:AUD = 0.9331)

 

Media Enquiries or Interview Requests

Senior Marketing Communications Manager
Melissa Fanous
mfanous@pepper.com.au
0412 033 103