Non-conforming lender Pepper Home Loans retrenched 19 staff on Tuesday, following its move earlier this month to trim its product range. Most of the staff affected were in sales and sales support roles. The company's headcount has come down from 104. Pepper chief executive John Empey said the company was setting itself for what it expected to be a medium term slowdown in the market for mortgage backed securities. Empey said he was encouraged by the recent recovery in RMBS issuance but noted that the issues were small, were mostly prime mortgage portfolios and were sold on wide spreads.Pepper last issued in the RMBS market in March. Empey said the group could stay out of the market for up to six months.Pepper has discontinued two loan products, Xpress and Mega Xpress. Both were sold to near-prime credits. It was a part of the Pepper business that Empey described as high volume and low margin.Empey said: "We took the view that we should not be selling low-margin products when there was so much uncertainty about our cost of funds."The redundancies are a direct result of the decision to get out of that part of the market.Empey said Pepper's business was down 20 per cent in September, compared to August, and fell further in October. Pepper introduced its near-prime range 18 months ago. Recent events have taken the company back where it was a couple of years ago. "We are hoping to see things normalise in the medium term," Empey said.As well as dropping the Xpress and Mega Xpress loans, Pepper took its maximum loan to valuation ratio down from 90 to 85 per cent and made its LVRs hard capped, which means that fees and other costs cannot be capitalised above the maximum. All capitalised charges must be accommodated within the 85 per cent LVR.Customers are no longer being offered a 12 month discount of one per cent on their non-conforming and low-doc loans. The one per cent loyalty bonus, for borrowers whose loans pass three years, will no longer apply.The completion fee has been changed from a flat rate of just under $900 to one per cent of the loan value on loans up to 80 per cent LVR, and 1.5 per cent on loans between 80 and 85 per cent LVR.