New market entrant Pepper Homeloans is set to build its mortgage range over the next 18 months, before building its product range further, according to UK chief executive Richard Klemmer.
Speaking to FTAdviser, he explained that before expanding beyond mortgages, the lender needs to get its UK business up to scale and make sure distribution channels are up to speed.
As a strictly third party firm, Pepper UK uses packagers, networks and directly authorised brokers to get its products out to customers, focusing on the near prime and non-conforming end of the market.
At launch in January, it began by offering residential and buy-to-let products on a pilot basis through Brightstar and the Mortgage Advice Bureau, after having acquired mortgage servicing business Oakwood Global Finance.
While only a small player in the UK market, the wider Pepper Group operates speciality financial services in Australia, South Korea, Hong Kong and Spain.
“We’re always looking to get into markets where consumers are underserved,” commented Mr Klemmer. “We saw a latent need in the UK, with post recession demand coupled to a limited supply side since the banks retreated from the near prime, non-conforming mortgage space.”
At its full launch last month, Pepper announced it had also linked up with Residential Home Loans, Connect Mortgage Club, Platinum Options and 3MC.
The current range consists of a non-conforming 4.27 per cent tracker at 75 per cent loan-to-value and a near prime 3.35 per cent tracker at 75 per cent LTV. Buy to let products include a non-conforming 4.55 per cent tracker at 70 per cent LTV and a near prime 3.9 per cent tracker at 70 per cent LTV.
Mr Klemmer added that research was currently being undertaken as to what the next menu of products would be, but over the next 18 months the focus is purely on building the mortgage business.
peter.walker@ft.com
