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Pepper Homeloans has shelved two products and axed 19 staff members in the past two weeks as jittery capital markets continue to hurt securitised lenders.
Xpress and Mega Xpress were culled from Pepper’s product suite on October 16 followed with the redundancies of 19 staff members last Tuesday.
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BDMs, front-end sales and front-end support for the product line were all shown the door.
“These products simply have the lowest margins and until we start to see some normalisation of the capital markets there is no sense in maintaining them,” Pepper Homeloans CEO John Empey told Mortgage Business.
While Empey believes that on a global scale Australian RMBS will quickly recover, capital market normalcy is still some way off.
“Although there are encouraging signs Pepper has no way to measure the market’s appetite for sub-prime RMBS while things are so up in the air,” he said.
Pepper will now focus on a medium-term strategy over the next 12 to 18 months, reintroducing the Xpress and Mega Xpress products once stability is assured.
“We simply have to wait for investors to regain confidence – that will happen when they have a benchmark for prime RMBS to use for the sub-prime market,” he said.
“For the meantime Pepper intends to consolidate, focusing on increasing volumes with good margins on our core products.”
