Quarterly applications and originations have jumped at Pepper Money, as the lender flags volatile conditions and rising borrower strain.
Non-bank lender Pepper Money has posted strong growth across its mortgage, commercial, and asset finance portfolios in the March 2026 quarter, yet has warned that a tougher economic backdrop could test borrowers later this year.
In a trading update for the first quarter of financial year 2026, Pepper reported total applications of $4.6 billion, up from $3.4 billion in the March 2025 quarter.
This is a 33 per cent rise for Q1 2026 on Q1 2025 and a 42 per cent increase over the 12 months to 31 March 2026 compared with the prior year.
Total originations also accelerated, lifting to $2.8 billion from $2.1 billion a year earlier, which the lender said represented 35 per cent growth for the quarter-on-quarter comparison and a 46 per cent uplift over the past 12 months.
Assets under management reached $17.7 billion in Q1 2026, up from $16.3 billion at March 2025, with Pepper noting that lending AUM rose by 8 per cent while total AUM increased 16 per cent over the year.
The update follows record originations and AUM reported for FY25.
CEO Mario Rehayem said the group’s recent momentum was being delivered against a challenging external backdrop.
“We are navigating a turbulent global landscape, where each day brings new uncertainties. In response, our best course of action is to concentrate on what we do best – providing exceptional experiences for customers and partners that keep Pepper Money at the forefront of creating and seizing new opportunities as they arise,” he said.
Prime mortgages and CRE drive mix shift
Rehayem highlighted that a sustained focus on pipeline building in the second half of 2025 was now flowing through to front‑end demand.
“On a positive front – we have entered 2026 in a strong position. Over the second half of 2025 we were focused on building and expanding our pipeline, and that is paying dividends,” he said.
Within that growth, the business said it was seeing a clear tilt towards higher‑quality borrowers and income‑producing property segments.
“We continue to observe a trend favouring prime mortgages, while applications in commercial real estate are experiencing robust growth,” he said.
“In addition, asset finance applications have increased by 10 per cent in quarter 1 2026 compared to quarter 1 2025.”
This mix shift aligns with broader market dynamics, as housing demand remains firm despite higher rates and constrained supply in many regions.
Strong start tempered by warning on borrower stress
While the Q1 numbers point to a solid platform for the remainder of FY26, Rehayem stressed that the operating environment was far from settled.
“Although we have had a strong start to the year, I am aware that conditions remain highly volatile and we may continue to encounter uncertainty throughout 2026 and potentially beyond,” he said.
He also cautioned that macro pressures were increasingly feeding through to household budgets as the Reserve Bank of Australia continues to grapple with elevated inflation.
“The impact of ongoing cost of living pressures, coupled with rising rates will impact some customers. However, we’re prepared to help customers manage their way through these difficult times,” Rehayem said.
[Related: Prime lending and brokers drive record Pepper Money year]
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