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No salt with the Pepper loan

Wednesday, November 16th 2011, 5:00AM 4 Comments

Here's an interesting question from a reader. He had a home loan with GE money which is now owned by Pepper Australia. The loan is split into three; two have matured and are now on a variable rate of 7.85%.
He's checked floating rates on and realised 7.85% "seems rather higher than the standard variable rates being offered."

The questions  are what to do, and how come Pepper's rates are so high? (Also he pondered whether he can complain to one of the external disputes resolution schemes).

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Comments from our readers

On 16 November 2011 at 9:52 am Jeff Royle said:
Too little information as to whether he can complain, on what grounds? There will be a reason he was with Wizard (GE) usually credit issues or high LVR? Pepper bought the GE book. If he is gianfully employed/self employed and has clean credit why does he not simply refinance to a Bank?
On 16 November 2011 at 10:49 am Chris Rapson said:
There is no information confirming this was a Wizard Loan. GE wrote loans of their own and numerous other lenders funded through AMS/GE. Those loans are now with Pepper. Many Australian businesses have adopted the same approach as Pepper has; "Hoover up as much profit as you can while you can because there is little competition and some clients have no choice". Jeff is right onto it; refinance now if that is possible. And remember, one day the worm will turn!
On 17 November 2011 at 10:28 pm Michael Donovan said:
GE are (were) lenders to NZ'ers just like banks, and I know of many people who obtained mge loans via GE when rates were actually comparable to most banks.

I list one of the biggest problems with any such lenders is the farcicle method they use when dealing with mortgages in any form of default.
eg; if you have a mge at say 7.86% and defaulted, the lender (GE or Pepper or your bank) deal with it as follows.

They bump your rate UP to say 12%...!

Now, if we use common sense maths, if a borrower cannot handle paying 7.86% (temporarily), then how on earth do the respective lenders expect the borrower/s to handle paying nearly "double" the monthly payments???

The lender is saying (in other words) that they (the lender/s) are going to ultimately sell the borrower up...commonly known as a mortgagee sale....which usually ends up achieving a lower sale price than normal...which in turn pushes general property prices down....blah blah blah.

Many refer to this phenomenon as part-and-parcel of a thing called a "recession"..!

Then the lenders get repaid most of their money (typically covered by insurers), and repeat the process of attracting borrowers to go and use the borrowings to buy the same properties....and so on.

Commonly referred to as "cycles."

Yes Chris...inevitably "worms do turn".

To the GE (now Pepper) borrower....go to a good mortgage broker and re-finance at a rate here in NZ...probably 30% less than you are being offered from Oz.

Do it through a good broker because good ones can get around small issues that 'may' exist & that the general public just do not have solutions for.
And it costs no more than trying to do it yourself in most cases.
Disclaimer; I am not a mortgage broker with a barrow to push...but I have quite a bit of experience and knowledge in such matters. Michael D
On 17 January 2012 at 12:47 pm ryan said:
Hi, I was with wizard and I only went there cause at the time they had the best interest rate and I new nothing about mortagages. Since GE and now Peppers have our loan our interest rate is nearly 1.5% more than anyone else. As there is not enough equity in the house due to falling prices, i cant refinance it. It sucks cause its not my problem that wizard went under. Is there anything else i can do?
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Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 ▼3.39
ANZ Special - ▼2.55 ▼2.69 ▼2.79
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - ▼2.55 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 ▼2.69 ▼2.75 ▼2.99
The Co-operative Bank - Standard 4.40 ▼3.19 ▼3.25 ▼3.49
TSB Bank 5.34 ▼3.35 3.49 3.79
TSB Special 4.54 ▼2.55 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.55 2.69 2.79
Median 4.55 3.19 3.22 3.39

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