Pepper Money finally offers Fixed rate products

Finally!

 

Rolf, what are their fixed rates like?

If you fully offset your loan using their sub account - will pepper close your loan? (Years back with CBA if the MISA offset the loan 100% they automatically closed the loan)

 

Pepper's latest variable increase was 0.65% The initial was 0.25 same as RBA.

 

What rate are they doing 10years fixed? I've not seen anything longer than 4-5years so far. nvm found the website says 7.29% p.a. - 12.29% p.a.

 

At some LVRs the increase was 0.8% on the back of the RBA's 0.5% increase.

Pepper and similar lenders certainly have their place. Pepper especially is great to work with. Service is good, they look outside the box and will lend money in a lot of circumstances where others won't. Given the risk they take on rates are generally resonable (IMO).

The risk however is their funding sources. There's no banking gurantee and their funding is subject to greater whims than the RBA. When money gets tight internationally, lenders such as Pepper feel it and the costs are passed on to customers.

Pepper came through the GFC quite well, but they weren't a lender you wanted to be stuck with at that time. Their rates went up faster and further than most lenders and they were slower to come down. What's happening now doesn't appear to be anywhere as bad as the GFC, but the pattern that non-conforming lenders are following is qutie similar.

 

Pepper is risk based lender....their funding is based on this.

I reckon they may raise interest rates a little bit more but they are well funded and backed by a very large corporate.

The real worry is Liberty.... Resimac... and Bluestone....let see.

For the record I am paying 4.24% already on 2 of my loans. I reckon at the peak they will hit high 5s or even a tad over 6.

 

Does this mean you think borrowers IR will only rise ~150-200 basis points from here? While possible, I think the main reason the RBA would stop there (despite market pricing in much higher) is if housing market properly collapses (30-40% down across the board, obviously with pockets even worse) such that economy heads into sharp 'stagflation' recession and RBA forced to cut to revive the corpse. I think this scenario is plausible (but obviously not good for investors who are leveraged) but based on their extraordinary turn around since March, I would think the RBA would reverse course late rather than early and we are likely to see cash rates up >250 bp from here before they even consider changing direction.

 

If you are paying 4.24 now then you might see a 7?
I thought they were talking about rates peaking at about 5-6% retail rate (with mainstreams)