Non-Banks Just Opened the Taps: Pepper’s 98% LVR, AMP’s 40-Year Investor Loan and Your Placement Playbook

Six lenders moved on policy in the last seven days, and almost all of them moved the same way: outwards. Pepper Money pushed its maximum LVR to 98 per cent and tripled its loan size at that tier. AMP Bank launched a 40-year investor loan with up to 10 years interest-only and no reassessment. Bank First widened its LMI waiver. Meanwhile the majors spent the same period tightening verification. For brokers, the week of 24–31 July was not a rate story — it was a capacity story, and it changes where marginal deals should go.

In This Article

• What Actually Changed: Six Lenders, One Direction
• Pepper Money Goes to 98 Per Cent — and Triples Its Loan Size
• AMP’s Equity Flex: A 40-Year Loan Built for a Post-Budget Cashflow Squeeze
• The Divergence: Majors Verify Harder While Non-Banks Widen the Gate
• Bank First and the Mutuals: LMI Waivers as a Precision Weapon
• The SMSF Clock: One Door Opens as Two Close
• TrailBlazer Lifts Trail-Book Lending to $200,000
• Where BID Bites: Capacity Is Not Suitability
• The Placement Playbook: What to Review Before Monday
• The Bottom Line

What Actually Changed: Six Lenders, One Direction

Broker Daily’s policy round-up for 24–31 July logged movement from Pepper Money, AMP Bank, La Trobe Financial, Bank First, Wave Money, Teachers Mutual Bank and TrailBlazer Finance. Strip out the SMSF withdrawals forced by legislation and a clear pattern emerges: the non-bank and mutual segment is buying market share with policy, not price.

That matters because policy-led competition behaves differently to a rate war. A 10-basis-point cut is easy to match and easy to reverse. A 98 per cent LVR tier, a 40-year term or an occupation-based LMI waiver is a structural position — slower to build, slower to unwind, and it moves deals that pricing alone never would.

Why now

Two forces are converging. The May Budget’s negative gearing and capital gains tax changes have unsettled investor cashflow assumptions ahead of the 1 July 2027 commencement. At the same time, application volumes across parts of the channel have softened. When volume tightens, credit appetite is one of the few levers a smaller lender can pull.

Pepper Money Goes to 98 Per Cent — and Triples Its Loan Size

Pepper Money’s changes are the most aggressive of the week in pure capacity terms. The non-bank has lifted its maximum LVR to 98 per cent (inclusive of the lender protection fee) across all four property categories — including high-density units, which is the genuinely notable part.

The loan size changes are just as material:

• Maximum loan at 98 per cent LVR tripled to $3 million
• Maximum loan at 80 per cent LVR doubled to $5 million
• 95 per cent LVR introduced across alt-doc solutions (including lender protection fee)
• Minimum unit size requirement reduced to 30 square metres

The changes apply across Prime and Near Prime Clear and will roll out to white label partners.

The 30-square-metre minimum and the category 4 inclusion are the two lines to circle. Small inner-city units and high-density stock have been the most persistently difficult security type on major bank panels for years. If you have a file that has been declined on security rather than servicing, it is worth a second look.

AMP’s Equity Flex: A 40-Year Loan Built for a Post-Budget Cashflow Squeeze

AMP Bank launched Equity Flex on 30 July, making it the first bank to offer investors a 40-year term with an interest-only period of up to 10 years and no reassessment at the end of it. The product had been in broker pilot for several months.

The mechanics:

• Investment loans of $100,000 and above, LVR of 80 per cent or less
• Interest-only periods of 6–10 years, no reassessment
• IO rate from 6.54 per cent p.a. (6.85 per cent comparison) at 60 per cent LVR or below; 6.59 per cent p.a. (6.88 per cent comparison) up to 80 per cent LVR
• P&I rate of 6.39 per cent p.a. (6.80 per cent comparison) across all LVR brackets to 80 per cent
• Serviceability assessed on a maximum 30-year P&I basis, with an exit strategy assessment
• Offset and redraw available

That serviceability line is the important one. The 40-year term extends the repayment runway; it does not manufacture borrowing capacity, because AMP still assesses over 30 years P&I. Brokers positioning this as a capacity play will misrepresent it. It is a cashflow and holding-power product.

AMP group executive Sean O’Malley told Broker Daily the product was a reflection of the team “listening to brokers and their feedback and building products to meet their needs,” describing it as an evolution of the bank’s 10-year interest-only offering launched last year.

He framed the demand directly: “For many investors, the question is no longer just whether a property is a good investment. It’s whether they have the flexibility and financial capacity to hold that investment and maintain their strategy through changing market conditions and evolving tax settings.”

AMP’s own worked scenario is instructive — a 45-year-old investor with $1.9 million in portfolio debt refinanced a portion onto Equity Flex and freed roughly $2,800 a month in cashflow with no increase in total borrowing. That is the client profile: asset-rich, cashflow-constrained, and reassessing after the Budget.

The obvious risk

A 10-year interest-only window with no reassessment is a real benefit and a real long-term cost. Over a 40-year term the total interest paid is materially higher than a 30-year P&I structure, and the client is not amortising for a decade. Document the trade-off in your file notes. AMP’s lending director Michael Christofides was explicit that the product is about “flexibility and choice, backed by responsible lending standards” — the responsible lending half of that sentence sits with you as much as with the lender.

The Divergence: Majors Verify Harder While Non-Banks Widen the Gate

Set the week’s loosening against what the majors have been doing and the two-speed market becomes obvious. ANZ suspended its Simpler Switch policy for external refinances from 10 July, requiring full income verification on new external refinance applications, with transitional treatment only for files already submitted and deemed sufficient. NAB has been reported as tightening ahead of the tax changes, and several lenders have stripped negative gearing benefits out of servicing calculations for borrowers who will lose eligibility.

The practical consequence: the same borrower can now get a materially different answer depending on which segment of the panel you approach, and the gap is widening. Deals that were marginal on a major six weeks ago may be comfortable at a non-bank today, while the streamlined refinance pathways that made majors attractive for low-touch switches have quietly closed.

Bank First and the Mutuals: LMI Waivers as a Precision Weapon

Bank First extended its LMI waiver to eligible borrowers in the healthcare and education sectors — up to 90 per cent LVR with no LMI premium, maximum loan $1.5 million, for owner-occupied purchases of established or completed properties that will be the borrower’s principal place of residence. It does not apply to construction, refinance or cash-out.

Teachers Mutual Bank Limited also joined the federal Help to Buy shared equity scheme across its Teachers Mutual, UniBank, Firefighters Mutual and Health Professionals Bank brands — direct from 27 July, and opening to its accredited broker network on 6 October after a pilot period.

Occupation-based waivers are not new, but their value has risen sharply. On a $1.35 million loan at 90 per cent LVR, avoiding LMI is a five-figure saving delivered at settlement — which lands harder in a client conversation than a rate differential of a few basis points. If a meaningful share of your book sits in health or education, the accreditation is worth the paperwork.

The SMSF Clock: One Door Opens as Two Close

With the residential LRBA ban taking effect on 10 August, the SMSF changes this week cut both ways.

Closing: Thinktank stopped accepting new residential SMSF approvals in principle from close of business 31 July, though purchase applications supported by a fully executed contract of sale dated on or before 9 August will still be accepted. AMP closes new SMSF SuperEdge pre-approvals at 5pm on 3 August, with contracts required to be signed and exchanged by 9 August.

Opening: La Trobe Financial launched an SMSF Fast Refi pathway that assesses eligible refinances on demonstrated repayment history rather than a traditional serviceability assessment. It applies to dollar-for-dollar refinances plus eligible costs, up to 80 per cent LVR on residential and commercial security, for corporate-trustee SMSFs that have held the existing loan with an approved lender for at least 12 months, have a strong repayment history, and are refinancing to lower monthly repayments.

That second one deserves attention. The LRBA ban restricts new residential borrowing; it does not extinguish the existing book. Every SMSF loan already written is a refinance candidate, and La Trobe has just made those files considerably easier to move. If your SMSF pipeline is about to disappear, your SMSF back book is where the replacement volume sits.

TrailBlazer Lifts Trail-Book Lending to $200,000

TrailBlazer Finance increased the maximum available through its Trail Xpress facility from $150,000 to $200,000. The facility lets eligible brokers borrow against the recurring income and underlying value of their trail book without property security or an upfront valuation fee, and is available to brokers with AFG, Connective, Loan Market and PLAN.

It lands at a pointed moment: broker numbers are contracting, lodgement volumes are uneven, and clawback exposure remains an open question in Treasury’s review. Borrowing against trail to fund growth is a legitimate tool, but it capitalises an income stream that clawback and refinance churn can both erode. Model it against a conservative run-off assumption, not last year’s trail.

Where BID Bites: Capacity Is Not Suitability

A loosening cycle creates a specific compliance hazard: the temptation to treat “this lender will approve it” as “this lender is right for the client.” Best Interest Duty does not contain a market-conditions exception, and ASIC’s expectations under RG 209 do not soften because a credit policy did.

Three exposures worth naming:

• High-LVR placement. A 98 per cent LVR approval on a high-density unit is a legitimate solution for the right client. It is also a near-zero equity position on a security type with weaker resale depth. Your file should show why the structure suits this borrower’s circumstances, not just that it was available.
• Extended interest-only. A 10-year IO window with no reassessment removes a review checkpoint. Record the total-cost comparison against a P&I alternative and the client’s stated reason for choosing the flexibility.
• Alt-doc at 95 per cent. Reduced documentation and high LVR in combination raise the standard of inquiry expected of you, not lower it. Verify carefully and evidence what you verified.

None of this is a reason to avoid the new policy. It is a reason to write better file notes when you use it.

The Placement Playbook: What to Review Before Monday

A practical sweep you can complete in about an hour:

1. Pull your declined and parked files from the last 90 days. Filter for anything knocked back on security type, unit size, LVR or loan size. Pepper’s category 4 inclusion and 30 sqm minimum will revive some of them.
2. Identify investor clients with equity and cashflow strain. Portfolio debt, LVR at or below 80 per cent, complaints about monthly holding costs. That is the Equity Flex conversation, framed as cashflow relief — never as extra borrowing capacity.
3. Segment your database by occupation. Healthcare and education clients at 85–90 per cent LVR planning an owner-occupied purchase are now materially better off with Bank First than with a lender charging LMI.
4. Audit every SMSF file in your book, not just your pipeline. Corporate trustee, 12 months’ clean repayment history, dollar-for-dollar refinance, sub-80 per cent LVR — that is the La Trobe Fast Refi profile, and it is a lower-friction conversation than any new SMSF purchase will be after 10 August.
5. Re-check your major bank refinance assumptions. If you were still quoting streamlined switch turnarounds at ANZ, update your client expectations before you set them.
6. Diarise 6 October for Teachers Mutual’s Help to Buy broker rollout, and check your accreditation status before then.

The Bottom Line

The last week of July delivered the clearest evidence yet that Australia’s lending market has split into two credit appetites operating at once. Non-banks and mutuals are competing on policy — LVR ceilings, loan sizes, term structures, LMI waivers — while the majors tighten verification and reprice risk ahead of the tax changes. Brokers who still run a default lender order built for 2025 conditions will systematically place deals in the wrong half of that market.

What to watch next: whether the majors respond to Pepper’s 98 per cent tier or cede the high-LVR segment entirely, whether AMP extends Equity Flex to owner-occupiers as it has signalled it will “consider,” and what the 11 August RBA decision does to the pricing side of a competition that has so far been fought almost entirely on policy.

The capacity is there this quarter. The obligation to justify how you use it has not moved.

Sources: Broker Daily — Broker policy round-up: Lender changes at a glance 24–31 July; Broker Daily — AMP Bank launches 40-year investor loan with 10yr IO; Broker Daily — The latest lender changes at a glance.

Disclaimer: This article is for general information and professional development purposes only. It does not constitute legal, compliance, or financial advice. Rates and policy settings cited were current at the time of publication and are subject to change without notice — always confirm directly with the lender. Brokers should consult their aggregator’s compliance team and, where required, seek independent legal advice regarding their obligations under the National Consumer Credit Protection Act 2009 and ASIC’s responsible lending guidelines.