Pepper to start offering mortgages in the New Year

Brendan Burgess

Brendan Burgess

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According to the Sunday Times, Pepper is talking to brokers about issuing new mortgages.

"It plans to target near-prime borrowers, who have no chance of getting mortgage approval from existing lenders due to slight blemishes on their credit records. Cheaper mortgages for homeowners with clean records and for buy-to-let investors are also expected."

I wonder what "cheaper mortgages for homeowners" means? Cheaper than near-prime rates or cheaper than the rates currently available from other lenders?

Brendan
 
Do they need to be regulated by the Irish central bank to provide mortgages here, or can they be registered in another European country? If so, can they get around the strict central bank guidelines?
 
It's a bit complicated but the bottom line is that all sub-prime lenders are required to comply with the applicable Central Bank Codes. Is that your question?
 
The Central Bank must approve them for Conduct of Business Rules. As they won't be taking deposits in Ireland, they won't be applying for a banking license.

As they are not a bank, I think that the lending guidelines will not apply to them. However, they are unlikely to lend credit impaired borrowers more than 80% LTV or 3.5 times LTI, so it's a moot point.

Brendan
 
Brendan Burgess said:
As they are not a bank, I think that the lending guidelines will not apply to them.
Click to expand...

Actually, I may be wrong on that.

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I thought that they had been brought in to protect the banks, but they are broader than that in purpose:

"3. Why is the Central Bank introducing these measures?
The key objective of these regulations is to increase the resilience of the banking and household sectors to the property market and to reduce the risk of bank credit and house price spirals from developing in the future. "
 
Sub-prime and other non-deposit taking lenders were deemed to be authorised as "retail credit firms" towards the end of 2007 to bring them within the scope of the Central Bank's Codes of Conduct.

The new housing loan regulations (which introduced the LTV/LTI restrictions) apply in respect of any loan advanced by a lender (as per the definition posted by Brendan above) that is secured or to be secured on a residential property in the State.

The bottom line is that the full regulatory framework for home loans applies equally to non-bank lenders.
 
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