Squirrel Money P2P

[Saamee]

4% Return for investing in Home Loans at this point in time - No Thanks - What if the house value drops by 15% and ONLY 100K in Reserve Fund!!


5% Return on a Business Loan - NO Way - Investing in Business Loans at this time with only ONLY 100K in Reserve Fund!!


6% - 7% in Personal Loans - Maybe - Have 500K in Reserve Fund ( best risk ) however better returns elsewhere in P2P



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[Saamee]

Don't get me wrong.... SM is still the ONLY P2P Lender I have had NO Capital Losses with.... ( Thanks to their Persoanl Loan Reserve Fund )

It's just their offerings have changed \ evolved over time ( where other P2P Lenders have not so much ) and what they now offer Investors is no longer attractive to myself....

[JB@Squirrel]

Hi Saamee,

You're assessing a reserve fund against low LVR lending secured over property. They are totally different things.

The average expected credit loss rate on a residential house book is 0.0005%. Over $150 billion of prime residential mortgage have been sold to investors in Australia with no investor losses. Even in Ireland during the GFC the loss rate of residential mortgages was only 5% and that was with a 50% drop in house prices and 1 in 10 households defaulting and 50% of new lending with deposits less than 20%. The UK had a loss rate 0.50% over the same timeframe.

Banks are lending at 2.70% on home loans, and we are paying investors 4%. The only reason we can do that is we are targeting older borrowers with very low LVRs who the banks tend to neglect. With the amount of equity in these properties we don't need reserves for losses, just to cover any arrears. The reason we are publishing examples in the blog is to add colour to the types of loans we are doing so investors can see that for themselves. It's purely to educate the market.

The Business Property Loan is lending on simple residential builds with unconditional buyers on the end of the transaction deposit paid. Benefit of buyer, deposit paid, 20% equity in transaction, and guarantee from build franchise.

These products won't be for everyone and certainly not right for anyone chasing higher risk/returns.

As for us being desperate, hardly.

Squirrel write over $1 billion of mortgages each year as a mortgage broker. We can now provide some of those through to the investor platform and already have $10m that we have pre-funded with our own facilities to pass down to the platform. We are keen to get investors engaging in this new investment class and so are promoting it.

Alternatively we could just get a big wholesale facility funding them at <4.00% and not bother about retail investors i.e. do a Harmoney. We're publicly committed to P2P which means we have to spend money promoting it and encouraging it to gradually grow.

[Saamee]

How long are people currently waiting to have their order filled for Personal Loans @ 7.5%??

I see that there is 343K in the queue as of today....


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[DT@squirrel.co.nz]

How long are people currently waiting to have their order filled for Personal Loans @ 7.5%??

I see that there is 343K in the queue as of today....


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Hi @saame, Dave Tyrer here from Squirrel. I estimate a 2 week wait at present in the 5-7year personal loan term. Hope that helps.

[Saamee]

Dave Tyrer here from Squirrel. I estimate a 2 week wait at present in the 5-7year personal loan term. Hope that helps.[/QUOTE]

@DT >> Thanx for the 'Inside reply'

So currently about 175K a week is being filled @ that rate....

Rgds

[Saamee]

Just put some 9% Loans on the Secondary market......

[Bjauck]

Hi @saame, Dave Tyrer here from Squirrel. I estimate a 2 week wait at present in the 5-7year personal loan term. Hope that helps.

How long is the wait now?

Is Squirrel back to the normal repayment process for loans? Does it still have a Covid response in place?

[DT@squirrel.co.nz]

Hi @Bjauck. The wait for 5 - 7yr investments is roughly 4 - 5 weeks at present. We have a new lending product coming to market very soon that will help shorten wait times in this term. Worth mentioning that wait times in the 1year space are much shorter 1 - 2 weeks at present. We also have investments available in the Home Loan and Business Property Loan investment classes, so no wait time for these ones.
Regarding loan repayments and Covid: our borrower arrears rate is running about 4%, and there are 9 loans in hardship at present. We know the average market arrears rate for personal loans is running between 7 - 8%. The personal loan reserve fund is higher today than it was 12months ago, with a coverage ratio of over 4% (disclosed on the investor tab on our website).
Hope that answers your questions.
Thanks
Dave

[Bjauck]

Thanks for your reply DT. It sounds to be in a good position.