Mortgages 

Pepper Money cuts two-year fixed rates

Pepper Money cuts two-year fixed rates

Pepper Money has cut rates across its two-year fixed-rate residential mortgage range. 

Tailored to borrowers who may struggle to secure mortgages with high street lenders, Pepper Money has lowered the price on seven of its two-year fixes for clients who have not had a county court judgement or default in the past six months. 

Higher loan-to-values (LTVs) have been reduced on the Pepper 18 range, with a two-year fix down from 4.28 per cent to 3.93 per cent up to 80 per cent LTV and another down from 4.43 per cent to 4.33 per cent up to 85 per cent LTV. 

On the Pepper 6 range a two-year fixed rate has dropped from 4.48 per cent to 4.08 per cent up to 70 per cent LTV. 

James Blower, marketing director at Pepper Money, said a failed credit score should not cost clients their hopes of securing a competitive mortgage. 

He added: "Which is why we continually review our pricing to make sure we are delivering the best possible value."

Mr Blower said: "We recently announced Pepper Money’s intentions to seek authorisation for a banking licence and the finalisation of terms to purchase Optimum Credit, subject to regulatory approval.

"However, we are not standing still and we continue to work to ensure we are providing brokers and their clients with market leading specialist products."

In September Pepper Money announced it had begun discussions with the Prudential Regulation Authority and the Financial Conduct Authority to apply for a banking licence, with senior hires confirmed to support the move. 

Tom Costelloe, a mortgage adviser at Independent James, said the reduction in Pepper's rates was a positive move. 

He said: "It seems to be a sign of intent, confirming that they are keen for business in what is still a busy and competitive market.

"Albeit expectations seem to be that rates will be increasing in the coming months, as it stands there are no significant changes as lenders across the board continue to vie for business, accentuated by Pepper dropping rates by up to a huge 0.70 per cent on some of their products."

Mr Costelloe said the reductions in rates will bring Pepper more towards the forefront when considering options for applicants with credit issues. 

He added: "It will now see them compete more closely with the likes of Precise, Masthaven and other so called 'sub-prime' lenders.

"Their fees remain competitive and the overall proposition will now place them in a strong position in what seems to be an ever growing sector of the market.

"It will be interesting to see over the coming weeks if any of their close competitors react in kind and how long Pepper will be able to retain this price point."

rachel.addison@ft.com