Pepper Homeloans to offer mortgages in Ireland

The Irish subsidiary of Australian listed financial services group Pepper is set to offer home loans here from February 1st through a small group of brokers.

This will make it the first new mortgage lender in the Irish market since the banking crash in late 2008 and the first non-bank group to offer home loans.

Pepper Homeloans will launch three mortgage products in Ireland for both home owners and buy-to-let loans. They will be targeted at people looking to switch their loans or consolidate their debts, the self-employed or those with impaired credit histories, and first-time buyers.

The loans will be offered through a group of about 20 mortgage brokers. "That's likely to change over time," Paul Doddrell, Pepper's chief executive in Ireland, told The Irish Times. "If things are going well, we're likely to work directly with consumers ourselves, which is something that [Pepper] Australia launched last year. It depends on how we travel."

Pepper Essential will be available for residential and buy-to-let customers with standard variable rates starting at 3.55 per cent for owner occupiers and 4.5 per cent for investors.

Essential Plus has been “tailored” towards the self-employed and those with “non-standard employment types”, with rates starting at 3.8 per cent for residential and 4.75 per cent for investors.

Its Advantage product will be aimed at people with a “legacy credit event” that is causing them difficulty in obtaining finance. Standard variable rates for this begin at 4.3 per cent for residential and 5.75 per cent for buy to let.

Customers applying for the Advantage loan must not be in arrears or negative equity, and must demonstrate a clean credit record for the past two years.

An arrangement fee of 0.5 per cent will also apply along with a valuation fee of €150. Investors will be required to pay legal fees of €1,550 for their loans.

The maximum term will be 30 years for residential and 25 for buy-to-let and the loans will be targeted at borrowers in the greater Dublin area, Cork, Limerick and Galway.

Mr Doddrell declined to provide any details on how much the company plans to lend or what market share it is targeting. He said it was “very difficult” to put a number on the potential universe of customers for Pepper’s mortgages.

He rejected the suggestion that some of the loans might fall into the sub-prime category. “For us you have to have a good two-year track record of being repaired. It’s more of a near prime product. Pepper has never operated in the sub prime market and never will.”

Pepper will be taking on a number of large and well established banks with its mortgage offering.

According to stockbroker Goodbody, AIB and Bank of Ireland each have a 30 per cent share of the Irish mortgage market, with Ulster Bank at 15 per cent, and Permanent TSB and KBC Bank Ireland at 12 per cent each.

Mr Doddrell described its headline rates as “competitive” and said it would look at each application on its “own merits”, rather than using an automated credit scoring model based on certain formulas.

Pepper entered the Irish market in 2012 as an asset servicer. It services more than 50,000 mortgage accounts here, mostly for third parties and has more than €14 billion in assets under management.

It employs 400 staff in Dublin and Shannon, with another 50 new jobs set to be created this year.

Latest filed accounts for Pepper’s Irish business show that it made a profit of €6.6 million on revenue of €27 million in 2014.

Founded in 2001, Pepper Group is listed on the Australian Stock Exchange and has a lending portfolio of more than €2.5 billion.