Harmoney

[leesal]

I've compared every new loan I've seen over the past 4 weeks with my longstanding investment criteria and conclude that either the quality of applications has dived in that period or Harmoney has applied amended selection criteria resulting in the better risk loans in all gradings being offered to investors other than us. Whichever it is, if this continues, then I expect to see retail investor defaults escalating.

Its slim pickings. Over the last few months theres been 60 loans a week. Unless that picks up, the 3000+ loan club will need to invest in every single loan to maintain numbers.

Have also noticed that autolend seems to be kicking in at the 65% level since late last week, haven't seen an announcement though.

[beacon]

... Whichever it is, if this continues, then I expect to see retail investor defaults escalating.

Who wants second best returns, BJ1? Certainly not the deeper-pocketed wholesalers, who not only seem to have gate crashed the little guy's P2P party big time, but for the benefit of whom, the retail offering seems to me, to be carefully stage managed now.

A loan offered every few hours, which because of low rate or poorer quality, now remains visible on the market for hours - making it seem like the retail guys are satiated and want to suckle on it no more...

Despite its various shortcomings, Harmoney - the first mover, was winning because only it had loan volume and choice - which its competitors didn't have. That is slowly but surely changing, while Harmoney seems to have done little to improve its book-keeping and investor relations.

Now it is digging the grave of its P2P avatar. At some time, this rope walking on the P2P license terms will be called in question, but it seems this company covets publicity more than public relations. Watching this space

[icyfire]

Now it is digging the grave of its P2P avatar. At some time, this rope walking on the P2P license terms will be called in question, but it seems this company covets publicity more than public relations. Watching this space
I agree. And I wonder at which point will ComCom bring into question HM's marketing claims of being a p2p lender to attract borrowers to its platform when for the last couple of months now 99% of its loans are filled by its wholesale customers.

[myles]

last couple of months now 99% of its loans are filled by its wholesale customers.

Care to show how you came up with this figure...

[darrenc]

Is 9.84% a new low for the platform? I'm still holding firm at just over 14.5% but I think we might need some investment-grade Viagra to keep it up.

[Vagabond47]

Arghh, is it just me or would anyone else look at these two loans and wonder why the hell you would lend money to these people?

#1 Earns suppossedly $3k/week after tax, rents in New Plymouth (Max rent in NP for even a pretty flash pad can't be more than a grand right?) leaving $2k a week in free cash to cover expenses.. and needs to borrow $30k @ 24% interest to consolidate debt? How do you get that far in debt with that income.. only answers I can come up with is hookers and nose candy.

#2.. well the loan is for vehicle purchase.. err, holiday and massage school training for the wife of a single man, and debt consolidation? I like how he/they are paying a mortgage and 0 months in the residence. There should be a report this application for pure BS button. Obviously no human bothers to actually read the application.

9798

[whitt]

I agree. The p2p aspect might be called into question soon by commerce commission if the status quo continues.
Majority of loans go under a guise to wholesale and not p2p as implied by advertising.
That could even threaten the licence they hold.

[ream]

Does anybody know if Harmoney read this forum?

[whitt]

Does anybody know if Harmoney read this forum?
It would be good if they did.
Theres important customer feedback within it

[777]

They have done in the past,

[bung5]

Volume seems to be picking back up

[BJ1]

In the last 4 weeks I've found 4 loans to meet my criteria and today I've found 5. Perhaps the new wholesale money has now been fully invested?

[leesal]

Huge amount of loans this morning.

Late last week I received a mailout, seems they've done a direct marketing campaign. Just at the right time, with the changes to working for families, fuel tax etc coming through

[beacon]

Some good volume and good quality loans coming through now, but then we get this:9803 A defaulter as an A5, and it makes me start to wonder about Harmoney ratings all over again. They have a Gini of 0.74, so they are likely to be wrong 1 in 4 times anyway...

[alundracloud]

D5 loan at the the old rate of 22.99%. I thought loan approvals lasted only 60 days?? The most recent changes to interest rates occurred 8 May 2018, meaning there shouldn't be any loans coming through at the old rates from the 7th July 2018?

[beacon]

D5 loan at the the old rate of 22.99%. I thought loan approvals lasted only 60 days?? The most recent changes to interest rates occurred 8 May 2018, meaning there shouldn't be any loans coming through at the old rates from the 7th July 2018?

Indeed, well picked up and pointed

[Wsp]

9806just saw a loan where the person has been employed for over 100 years!

[humvee]

Still available this morning. No surprises that there are no takers for loaning money to the 40 year old who has worked for the same employer for the last 101 years

[joker]

Still available this morning. No surprises that there are no takers for loaning money to the 40 year old who has worked for the same employer for the last 101 years
And so it proves that there really is no checking of the info that borrowers give Harmoney. We really are investing blind.

[BJ1]

But despite that results are still OK:
9808

[BJ1]

4 payments and back again - wonder what the first loan was for?

9813

[andrewfreestuff]

Wsp - is that a harmoney app? Or just your browser or something?

[beacon]

And so it proves that there really is no checking of the info that borrowers give Harmoney. We really are investing blind.

And someone is back to their old tricks again too. Loans coming regularly all day today, 20% or so auto-lent, but before you can put an order in, they're gone. Some of them with multiples of 10,000s gone in less than 10 seconds after they hit the marketplace.

Its becoming as bad as Lending Crowd here...

BTW, very impressive BJ1. You sure know your stuff...

[whitt]

And so it proves that there really is no checking of the info that borrowers give Harmoney. We really are investing blind.

Surely they can detect an algorithm that filter or flags BS . That way if a typo or something else slips thru they can manually check it

[ream]

Surely it shouldn't even be possible to put 3 digits in a field that asks for number of years in a job. :confused:

[Wsp]

Wsp - is that a harmoney app? Or just your browser or something?

It was just a screenshot from my phone.

[Cool Bear]

But despite that results are still OK:
9808
Great returns. You are doing well indeed.

[Vagabond47]

New week, new bunch of Loans in arrears. At least now the new ones are all 0-30 days in arrears, and not suddenly appearing in arrears at 60+ days.

[Wsp]

New week, new bunch of Loans in arrears. At least now the new ones are all 0-30 days in arrears, and not suddenly appearing in arrears at 60+ days.

I noticed a jump in my arrears this week as well.

[myles]

Possibly influenced by School Holidays - payments get missed.

[CageyB]

I think I might be done with Harmoney--I've had ~15% of my total investment paid back over the past few months with almost no loans to reinvest (4 in July, 11 in June). Not sure where to take the funds.

[myles]

It has been a rough ride of late, but things have improved in the last two or three weeks - I've been able to get almost all of my available principal re-invested with some good quality loans.

The graph below plots my invested principal - blue line with scale on the left vs the total gain (i.e. total value less defaults, fees, tax) - red line with scale on the right:

9829

Overall the gain is tracking very consistently for a clear return above 15%pa. The first dip in the blue principal line is my deliberate choice to not take on many loans during the lead-up to Christmas, the second longer dip is due to recent lack of loans, but is now almost back on track.

Added: [this is on a fixed $100K investment i.e. no withdrawals for clarification]

[leesal]

It has been a rough ride of late, but things have improved in the last two or three weeks - I've been able to get almost all of my available principal re-invested with some good quality loans.

The graph below plots my invested principal - blue line with scale on the left vs the total gain (i.e. total value less defaults, fees, tax) - red line with scale on the right:

9829

Overall the gain is tracking very consistently for a clear return above 15%pa. The first dip in the blue principal line is my deliberate choice to not take on many loans during the lead-up to Christmas, the second longer dip is due to recent lack of loans, but is now almost back on track.

Added: [this is on a fixed $100K investment i.e. no withdrawals for clarification]

Am getting enough loans too, esp the last few weeks now. Although am at a much lower base, so only need to reinvest a a few hundred to stay static.

Nice Graph Myles. You're doing very well. How are you achieving 15%. To achieve that I'd need to be at 26.5%+ before costs (top tax bracket). Aren't most you loans platform 1.5?

[myles]

10.5% tax rate so equivalent would be above 11% + any concessions/deductions etc.

[permutation]

I think I might be done with Harmoney--I've had ~15% of my total investment paid back over the past few months with almost no loans to reinvest (4 in July, 11 in June). Not sure where to take the funds.

Sometimes you can lose heart CageyB, but there has been slim pickins' lately for almost everyone except some people on this forum who state that they are able to reinvest their large cash reserves easily; hmmm, maybe they have very broad or no filters, a lot of time and maybe good luck!

I keep track of my principal repayments over a running 6 month period and have found 44% of my total outstanding principal is repaid over this time.

So it is a difficult task to lend new money against the rapid flow of repayments. I currently have a 22% Cash Balance vs Outstanding Principal and have Autolend On.
I do receive a trickle of loans this way with my very strict filters and if I happen to log in and see some loans in and out of my Autolend filter, I quickly analyze them and if suitable lend to them before they vanish within minutes!

[humvee]

I currently have a 22% Cash Balance vs Outstanding Principal and have Autolend On.
I do receive a trickle of loans this way with my very strict filters and if I happen to log in and see some loans in and out of my Autolend filter, I quickly analyze them and if suitable lend to them before they vanish within minutes!

If your struggling to get loans via auto lend with a 22% cash Vs outstanding. No wonder I've had only 3 auto lend loans in 3 months during this time I've generally been between 4% and 6%.
The problem is with 22% of your portfolio earning 0% your real returns will be dragged way down

[permutation]

If your struggling to get loans via auto lend with a 22% cash Vs outstanding. No wonder I've had only 3 auto lend loans in 3 months during this time I've generally been between 4% and 6%.
The problem is with 22% of your portfolio earning 0% your real returns will be dragged way down

There is no problem, this is a temporary injection of cash which is sourced at an interest rate about 3 times less than my current RAR of 13.99%.

Sadly, the real unfair problem emerged when Harmoney increased the limit of Autolend lend notes from 4 to unlimited quite sometime ago.

I still believe that Autolend loans should be limited to 4 or less, to make it fairer for the small retail lenders , the majority of whom are most probably at work unable to access the platform.

[humvee]

There is no problem, this is a temporary injection of cash which is sourced at an interest rate about 3 times less than my current RAR of 13.99%.

Sadly, the real unfair problem emerged when Harmoney increased the limit of Autolend lend notes from 4 to unlimited quite sometime ago.

I still believe that Autolend loans should be limited to 4 or less, to make it fairer for the small retail lenders , the majority of whom are most probably at work unable to access the platform.


Although 22% uninvested drops your real returns once factored in to ~10.9%

[permutation]

Although 22% uninvested drops your real returns once factored in to ~10.9%

22% of my Outstanding Principal in cash represents the NET interest generated by my portfolio over the last 40 months lending.

Even a 10.9% return in the short term for my purposes is still great.

[beacon]

Sometimes you can lose heart CageyB, but there has been slim pickins' lately for almost everyone except some people on this forum who state that they are able to reinvest their large cash reserves easily;

Been a hard grind trying to reinvest principal returned during May last week - 11 July ish. Picked up subsequently, but still patches where a good chunk of loans come on the marketplace and vanish in a flash. Still, better volume than Lending Crowd, and better rate than Squirrel etc. For the moment...


I keep track of my principal repayments over a running 6 month period and have found 44% of my total outstanding principal is repaid over this time.

Mine's at 40% ish too. Great RAR permutation.

Great going myles... :)

[BJ1]

I keep track of my principal repayments over a running 6 month period and have found 44% of my total outstanding principal is repaid over this time.


For the past six months my repayments have been near to the same. I deliberately target 36 month terms and low repayment percentages, which leads to higher cash flow and more of my loans being topped up.

[Vagabond47]

May be of interest to many here.. Heartland bank restructuring and listing on ASX. And they own a decent chunk of Harmoney.. https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12099133

[Wsp]

HARMONEY NARROWS LOSS AS FEE INCOME SURGES
Harmoney has posted a March year loss of $1.9 mln, down from $6.5 million the previous year. The licensed peer-to-peer lender recorded a near doubling of revenue, which consists almost entirely of fees, to $26.2 million from $14 mln. Expenses rose 34% to just over $28 mln. Accumulated losses reached $28.737 mln at March 31, with Harmoney having share capital of $32.8 mln. Having gone live in September 2014, Harmoney's website says it has matched borrowers and lenders for loans worth $750 mln. Meanwhile Squirrel Money, another P2P lender, narrowed its March year loss 13% to $492,379 with revenue up 84% to $393,733.
Source: interest.co.nz

[leesal]

Good volume over the last few weeks

Not sure I agree with some of the grading though. For example this one

9833

[Robuste]

eeek 30% of income on repayments !

[boysy]

renting - 50 odd - 30% income on debt and one default to boot - how can this be classified as a C1

[leesal]

renting - 50 odd - 30% income on debt and one default to boot - how can this be classified as a C1

99.63% chance it won't default apparently :eek2:

[leesal]

Am coming up a year in a few weeks time. RAR 14.75%, running at 14.3% writing off any debt having arrears beyond 60 days - although am only projecting 10.5% based on HM annual default by grade estimates upon full term.

Best performing grade as at today is F = 23.3%, worst A = 8.7% followed by E at 11%. Expect that to change as loans mature.

My overall risk vs reward graph (plots total interest income, against principal written off or in arrears; by number of successful interest payments made), is looking okay - although E grade is showing the effects of some poor risk selections early on in my portfolio.

9840
9841

[permutation]

Been lending for 40 months now, I switched away from E an F grades from September 2015 due to heavy losses, the low point of my RAR graph, then began concentrating in the mid-range zones and it's served me well. Latest RAR 14.06% being 422 pips above the platform.

9842

[myles]

I know things here in NZ are very different to America, however I found the following article littered with potential warning signs of the future. Perhaps of some value to loan selection strategies:

https://www.nytimes.com/2018/08/05/business/bankruptcy-older-americans.html

There are also some major concerns in Australia at the moment regarding out-of-control Credit Card debt. Where is all this heading?

[leesal]

Been lending for 40 months now, I switched away from E an F grades from September 2015 due to heavy losses, the low point of my RAR graph, then began concentrating in the mid-range zones and it's served me well. Latest RAR 14.06% being 422 pips above the platform.

9842

Great going!

I still think there are worthwhile loans in grade E , just being very selective. Last year I had 25% grade E or F and some of those wouldn't touch with a bargepole today. Other then certain risk pockets, am relatively happy barring a complete financial meltdown,

[Vagabond47]

One thing I know for sure, from November to Mid January I'll tighten up my lending criteria and stick with the B & C grade stuff. My only loans still in arrears (and looking like they are well on their way to write-down) are E grades issued in Early December.

[Wsp]

Interesting summary of the various P2P platforms in NZ at present
www.interest.co.nz/personal-finance/95115/gareth-vaughan-conducts-stocktake-just-how-involved-retail-investors-are-nz (https://www.interest.co.nz/personal-finance/95115/gareth-vaughan-conducts-stocktake-just-how-involved-retail-investors-are-nz)

[PennyPicker]

Thank for the link @Wsp.

Article timing makes me wonder if Gareth is a reader of this forum thread given the chatter from a few weeks back. If so, @Gareth, thanks for doing the legwork on this. If not; thanks anyway.

[RMJH]

Thanks Wsp. Wholesale support for P2P is killing it? Unless they substantially reduce funding of Harmoney it will surely remain a tiny niche investment opportunity unless of course there is some other radical change like acquisition of finance companies. Maybe we are just too tight to meet market interest rates!

[myles]

Wholesale support for P2P is killing it?

A different take: Wholesale support for P2P lending is what is allowing it to grow...in Harmoney's case anyway. Without it, I suspect, Harmoney would not be viable.

The 'P2P lenders' who don't *yet* include wholesale investment are unable to meet investment demand - they need to 'grow' significantly to meet the demand, wholesale investment appears to be the way forward for growth at this time.

[RMJH]

A different take: Wholesale support for P2P lending is what is allowing it to grow...in Harmoney's case anyway. Without it, I suspect, Harmoney would not be viable.

The 'P2P lenders' who don't *yet* include wholesale investment are unable to meet investment demand - they need to 'grow' significantly to meet the demand, wholesale investment appears to be the way forward for growth at this time.
I agree wholesale funding was vital to get critical mass but wonder if it is now blocking mass participation such that it will never become a game changer in financial services here. Lack of support from the powers that be doesn't help either. I hope the tax working group at least take a look at P2P. I see Zopa in the UK has achieved significant scale is now raising capital to become a bank.

[darrenc]

Chinese P2P lenders are in a lot of trouble https://money.cnn.com/2018/08/08/news/economy/china-p2p-lending/index.html

[Bjauck]

I agree wholesale funding was vital to get critical mass but wonder if it is now blocking mass participation such that it will never become a game changer in financial services here. Lack of support from the powers that be doesn't help either. I hope the tax working group at least take a look at P2P. I see Zopa in the UK has achieved significant scale is now raising capital to become a bank. They should have looked at retail taxation implications, and a tax ruling provided, of p2p at the time p2p was given the go ahead by FMA. This should especially have been the case in NZ given our poor financial investment rate and over reliance on residential housing investment when compared with developed nations.

[Investor]

I agree wholesale funding was vital to get critical mass but wonder if it is now blocking mass participation such that it will never become a game changer in financial services here. Lack of support from the powers that be doesn't help either. I hope the tax working group at least take a look at P2P. I see Zopa in the UK has achieved significant scale is now raising capital to become a bank.

Well it seems that most borrowers aren't aware that most of the lending is coming from institutional funding.

Harmoney just haven't yet been able to attract enough customers for there to be the scale that you desire. It's hardly surprising that a new lending business isn't able to take over the market.

[kiwi783]

A B2 loan on Harmoney today. Income type = Home (8424 per month). I've not noticed "Home" as an income type before and a quick search through site I couldn't find a description. Has anyone seen a fuller description of this income type?

[Investor]

A B2 loan on Harmoney today. Income type = Home (8424 per month). I've not noticed "Home" as an income type before and a quick search through site I couldn't find a description. Has anyone seen a fuller description of this income type?

Possibly renting out a property they own?

[myles]

Working from home would be my best guess. The graph below shows the available Employment Status options:

9863

[kiwi783]

Thanks Both. Yes, as always, I'm left wondering about the quality of even the small amount of information provided by Harmoney. oh well, I guess I should be grateful that they even provided a loan for me to consider, after the whales have had their feed of course.

[leesal]

One of my loans with income "home" is renting. Myles guess would be mine.

Think I need my eyes checked, a B2 with 2 defaults wanting a holiday care of the good folk at HM

9869

[Vagabond47]

One of my loans with income "home" is renting. Myles guess would be mine.

Think I need my eyes checked, a B2 with 2 defaults wanting a holiday care of the good folk at HM

9869

Residential state: Other.. So, two defaults, a 6 month rewrite and living out of the back of a van?

[joker]

Residential state: Other.. So, two defaults, a 6 month rewrite and living out of the back of a van?
Judging by the length of time it's been sitting there the institutions must be leaving it for the mugs to fill...

[Vagabond47]

Judging by the length of time it's been sitting there the institutions must be leaving it for the mugs to fill...

Eh? If it makes it to the retail side the institutions never saw it. Loans get allocated to either the institutional pool or the retail pool, they don't get put into both.

[joker]

Eh? If it makes it to the retail side the institutions never saw it. Loans get allocated to either the institutional pool or the retail pool, they don't get put into both.
Ahhh...that explains why I'm seeing so few decent loans on the site! Now I understand!!!

[icyfire]

Withdrawing all my funds from Harmoney as it becomes available and investing it in Simplicity Funds (https://simplicityfunds.kiwi/). Harmoney has now become a waste of time IMHO.

[alundracloud]

Didn't you "withdraw all your funds" on the 18th of June?

[777]

Withdrawing all my funds from Harmoney as it becomes available and investing it in Simplicity Funds (https://simplicityfunds.kiwi/). Harmoney has now become a waste of time IMHO.

I started that two years ago. Down to $81 now. Cashing up is a slow process.

[icyfire]

@alundracloud Yes I did and still withdrawing more as principal and interest accumulate

[leesal]

Totally understand you guys taking your positions into runoff. Without autolend HM hardly a passive investment.

But for the meantime, I'm slowly increasing my position. After just over a year overall P2P investment 40k, and HM 28k of that.

9871

9872

[johna]

Hi, That's a nice return, are you deliberately avoiding cat A loans?

[joker]

Totally understand you guys taking your positions into runoff. Without autolend HM hardly a passive investment.

But for the meantime, I'm slowly increasing my position. After just over a year overall P2P investment 40k, and HM 28k of that.

9871

9872

Great figures leesal. Incredibly low charge-offs for 1 year in with so much in C, D & Es. You're obviously good at picking your risk. How many active loans do you have with Harmony atm?

[leesal]

Thanks :)

@ johna - Correct don't take many A's, just really depends on the risk/return profile your wanting to take.

@ Joker - Don't know about that! My figures flatter to deceive as its not 30k invested straight away like a lot of others. Am running at a static loss of 0.76% on the 2017 H2 Cohort, vs the platform at 0.57%, plus some charge offs in all but name on some ugly E's from Nov17 & Dec17. But am hopefully am making better decisions in 2018. Have a little over 800 individual loans

[humvee]

Thanks :)

@ johna - Correct don't take many A's, just really depends on the risk/return profile your wanting to take.

@ Joker - Don't know about that! My figures flatter to deceive as its not 30k invested straight away like a lot of others. Am running at a static loss of 0.76% on the 2017 H2 Cohort, vs the platform at 0.57%, plus some charge offs in all but name on some ugly E's from Nov17 & Dec17. But am hopefully am making better decisions in 2018. Have a little over 800 individual loans


That sure is a low number of charge offs , Ive got a RAR a little higher then yours but way way higher charge offs

Although my portfolio is probably more "Aged"
9873

9874

[humvee]

I decided to crunch some numbers again, to be honest this time i did not come up with anything particularly useful compared to in the past


Portfolio Age

Average days since investment all loans 693.57 days


Average age of active loan 493.26 days
Average age of Active F Grade Loan 657.68 days
Average age of Active E Grade Loan 595 days
Average age of Active D Grade Loan 476 days
Average age of Active C Grade Loan 410.19




Average Age of "Current" Loan 483.86 Days
Average Age of "Arrears" Loan 602.79 Days


Oldest Loan 1301 Days
Oldest Active Loan 1297 Days

Average Interest rate All Active loans 24.7%
Average Interest rate Arrears Status 27.95%
Average interest rate Current Status 24.53%

Income to repayment Ratios Average ( Monthly Repayment / Borrower Income or Combined Income )


All loans 8.33%
Paid Off 7.74%
Current 9.29%
Arrears 8.99%
Charged off 7.89%
Debt Sold 7.17%


F Grade 9.51%
E Grade 7.1%
D Grade 8.52%
C Grade 9.52%

[leesal]

That sure is a low number of charge offs , Ive got a RAR a little higher then yours but way way higher charge offs

Although my portfolio is probably more "Aged"
9873

9874

14.6% is a top return after 3.5 years!

Age matters quite a lot though. My oldest cohort is H2 2017, on HM static loss shows 8 months from origination, with a static loss of 0.57%. I originally invested $6750, at the platform average suggests $38 charged.

One of your first cohorts was H2 2015 (currently the best performing cohort), which today has a platform static loss of 4.97%.The same $6750 invested in that cohort, would give charge-offs of $335 at the plaform average. A ten-fold difference

[leesal]

I decided to crunch some numbers again, to be honest this time i did not come up with anything particularly useful compared to in the past


Portfolio Age

Average days since investment all loans 693.57 days


Average age of active loan 493.26 days
Average age of Active F Grade Loan 657.68 days
Average age of Active E Grade Loan 595 days
Average age of Active D Grade Loan 476 days
Average age of Active C Grade Loan 410.19




Average Age of "Current" Loan 483.86 Days
Average Age of "Arrears" Loan 602.79 Days


Oldest Loan 1301 Days
Oldest Active Loan 1297 Days

Average Interest rate All Active loans 24.7%
Average Interest rate Arrears Status 27.95%
Average interest rate Current Status 24.53%

Income to repayment Ratios Average ( Monthly Repayment / Borrower Income or Combined Income )


All loans 8.33%
Paid Off 7.74%
Current 9.29%
Arrears 8.99%
Charged off 7.89%
Debt Sold 7.17%


F Grade 9.51%
E Grade 7.1%
D Grade 8.52%
C Grade 9.52%

Looks like your higher grades have a much higher repayment ratio.

With that grade mix the defaults should be much higher compared to those investing in the midgrades. What is your default as a % of loans lent?

Using platform averages, you should be generating Defaults of 11% over the lifetime (any better and you're beating the average). Can also apply static loss to work out roughly how you are currently tracking.

[humvee]

Looks like your higher grades have a much higher repayment ratio.

With that grade mix the defaults should be much higher compared to those investing in the midgrades. What is your default as a % of loans lent?

Using platform averages, you should be generating Defaults of 11% over the lifetime (any better and you're beating the average). Can also apply static loss to work out roughly how you are currently tracking.

Net Charged-Off Principal as % of Loan investments Funded is 7.14%

[leesal]

Net Charged-Off Principal as % of Loan investments Funded is 7.14%

FYI - My data on that grade mix.

9878

[myles]

Not sure how new this is:

9884

https://www.harmoney.co.nz/investors/default-rates

The height of the Light Blue area minus the height of the Dark Blue area on the bottom graph gives an indication of where the best ROI is (note that 2018 is incomplete so best removed when viewing the bottom graph).

Edit: The area difference doesn't give the ROI as I suggested - Default Rates can't be subtracted from Interest Rates for obvious reasons...Doh!

[leesal]

Not sure how new this is:

9884

https://www.harmoney.co.nz/investors/default-rates

The height of the Light Blue area minus the height of the Dark Blue area on the bottom graph gives an indication of where the best ROI is (note that 2018 is incomplete so best removed when viewing the bottom graph).

Edit: The area difference doesn't give the ROI as I suggested - Default Rates can't be subtracted from Interest Rates for obvious reasons...Doh!

Cheers for that. Some really useful information. Never realised HM was supplying that. Just need some decent loans to invest in now.

Interesting to see that the average results for the individual years 2014, 2015, 2016, 2017 (with the exception of grade F) are all significantly worse then the forecasted defaults.

[humvee]

Early repayments are coming in the fastest I have ever seen over the last 3 days,
Equivalent of 40 full Notes repaid - and I almost never invest more then 4 notes per loan

[humvee]

I notice all 4 loans listed at the moment are rewrites
9885

[Vagabond47]

yep, definately hard to find quality loans at the moment. And those default rate figures I hadn't seen before. Grade F originated in 2015, 28.6% cumulative default rate, with half of that in the first year. F that!

[darrenc]

This is good as I'm trying to get my money out.

[darrenc]

Is anyone interested in buying my Harmoney account? I'm buying a house (the wife says we have to 'trade up').
I have approx $60k in there making 14.50% at present. Mostly older B4-D2 plus some other randoms in the A and E. No F. F that! All bar one investment was made before June 1 2018. $320 in arrears, about 1400 loans to pay out.
It would take you an eternity to get $60k invested, plus there are very few good loans around right now. I was going to let this run out and just pull my money out gradually, but if someone's keen on making me an offer and reaping the next 3-4 years' interest in a well-curated list of loans, PM me.

[bung5]

Is anyone interested in buying my Harmoney account? I'm buying a house (the wife says we have to 'trade up').
I have approx $60k in there making 14.50% at present. Mostly older B4-D2 plus some other randoms in the A and E. No F. F that! All bar one investment was made before June 1 2018. $320 in arrears, about 1400 loans to pay out.
It would take you an eternity to get $60k invested, plus there are very few good loans around right now. I was going to let this run out and just pull my money out gradually, but if someone's keen on making me an offer and reaping the next 3-4 years' interest in a well-curated list of loans, PM me.

Would consider this if harmoney could facilitate the loan book transfer. Otherwise would be too messy . Would really like it if HM had secondary market

[777]

It has taken me 3 years to get $40,000 out. I had 36 month loans except for 2 60 month ones. Majority $250 loans but some $500. Luckily there were a lot of early repayments to hurry things along.Only have one left. It is a 60 month one and goes to November next year.

[humvee]

I do agree with the F____n amazing comment of this borrower - but probably not for the same reason they do.

A Boarder with a time at residence of 0 Months, Borrowing a loan amount 1.34 times more then their annual income, With Repayments of 38.3% of their monthly income gets Graded B2 with an interest rate for an UNSECURED loan of 14.75%

I wouldnt lend on this one if It was paying the D2 interest rate - let alone at the lower rate

9886

[Investor]

I do agree with the F____n amazing comment of this borrower - but probably not for the same reason they do.

A Boarder with a time at residence of 0 Months, Borrowing a loan amount 1.34 times more then their annual income, With Repayments of 38.3% of their monthly income gets Graded B2 with an interest rate for an UNSECURED loan of 14.75%

I wouldnt lend on this one if It was paying the D2 interest rate - let alone at the lower rate

9886

Boarding in Hamilton with $55k of unsecured debt. Good times..

[humvee]

yep, definately hard to find quality loans at the moment. And those default rate figures I hadn't seen before. Grade F originated in 2015, 28.6% cumulative default rate, with half of that in the first year. F that!

At least back then all F grade loan paid 39+% now an F grade loan can pay as little as 27% - which is why I dont touch them any more - the default rate is high - and the interest needs to cover it, When the default rate is HIGHER then the interest rate you are loosing big time

[darrenc]

Is anyone interested in buying my Harmoney account? I'm buying a house (the wife says we have to 'trade up').
I have approx $60k in there making 14.50% at present. Mostly older B4-D2 plus some other randoms in the A and E. No F. F that! All bar one investment was made before June 1 2018. $320 in arrears, about 1400 loans to pay out.
It would take you an eternity to get $60k invested, plus there are very few good loans around right now. I was going to let this run out and just pull my money out gradually, but if someone's keen on making me an offer and reaping the next 3-4 years' interest in a well-curated list of loans, PM me.


Would consider this if harmoney could facilitate the loan book transfer. Otherwise would be too messy . Would really like it if HM had secondary market

Agreed it would make it easier. I will contact them and see. Otherwise, you'd just need to let it run out and withdraw the cash over time.

[Vagabond47]

Boarding in Hamilton with $55k of unsecured debt. Good times..

well, its slightly better for those that "invested" in that loan than if s/he'd been paying a mortgage on a recently purchased property in Hamilton and borrowing that much.

[joker]

Yes, I too am done with Harmoney. It's far too time consuming trying to find suitable loans. I will let my loan book (currently $54k with c.1900 loans) liquidate itself. Cash seems to be coming in at near $1,000 per week atm even though I have upped my investment per loan. I'm very concerned about the current class of borrower vs. interest rates - particularly as the economy seems to be slowing. Also, there doesn't seem to be much active and successful chasing of bad debts - but I suppose that's the inherent risk of unsecured lending where much of the detail/data provided by borrowers is taken at face value by Harmoney and thus us lenders.

[joker]

well, its slightly better for those that "invested" in that loan than if s/he'd been paying a mortgage on a recently purchased property in Hamilton and borrowing that much.
Probably not as if he/she had purchased a property, at least he/she would have some equity (perhaps 20% of the property value) whereas in his/her current circumstance with $55,000 owed to Harmoney, he/she is most likely insolvent (read technically bankrupt) as liabilities almost certainly exceed assets. Will probably take the $55k, blow it on P, declare bankruptcy and start again. That's the way it is in NZ these days. Even better, claim mental health risk and the debt will likely be written off without the need for bankruptcy! Hopefully, my pessimism is unfounded :)

[Vagabond47]

Probably not as if he/she had purchased a property, at least he/she would have some equity (perhaps 20% of the property value) whereas in his/her current circumstance with $55,000 owed to Harmoney, he/she is most likely insolvent (read technically bankrupt) as liabilities almost certainly exceed assets. Will probably take the $55k, blow it on P, declare bankruptcy and start again. That's the way it is in NZ these days. Even better, claim mental health risk and the debt will likely be written off without the need for bankruptcy! Hopefully, my pessimism is unfounded :)

But from a cash flow point of view at least he doesn't have ~$800 a week heading out the door to service a mortgage, hopefully only paying a couple hundred a week in board, so might be able to afford the P habit and the harmoney repayments. lol.

[joker]

But from a cash flow point of view at least he doesn't have ~$800 a week heading out the door to service a mortgage, hopefully only paying a couple hundred a week in board, so might be able to afford the P habit and the harmoney repayments. lol.
Haha - I love your humour:)

[bullfrog]

But from a cash flow point of view at least he doesn't have ~$800 a week heading out the door to service a mortgage, hopefully only paying a couple hundred a week in board, so might be able to afford the P habit and the harmoney repayments. lol.

Sounds familiar... couple of hundred in board (rent office space), p habit (cost of your pppeople), and making just enough to make repayments, yep, typical startup business plan. Could name and shame but we all know the companies... hha

[myles]

Just doing some monthly numbers so thought I'd put up some data as it's always good to compare against others.

This represents around 18 months of investing $100K, no withdraws, 2,229 total loans.
The charge off value may look high to some, however it only represents 1.6% defaults (on loan count, almost the same in value). My return calculation, after tax (10.5% + deductions) is 15.52% based on current value.

I think I may now be over the 'default' hump (i.e. in year two defaults begin to reduce) as I'm seeing my RAR creep upwards ever so slowly. Time will tell - hopefully in another 6 months those older loans will start to outweigh the new defaults (note ~80% of my loans are 5 year loans).

9892

9893

I have another loan set running at 14.84% RAR with more C's, less D's and less E's, so having the balance pretty much in the middle, seems to be working for me. I'd like to pick up some more D's and E's, but they just aren't available.

[Cool Bear]

Just doing some monthly numbers so thought I'd put up some data as it's always good to compare against others.

This represents around 18 months of investing $100K, no withdraws, 2,229 total loans.
The charge off value may look high to some, however it only represents 1.6% defaults (on loan count, almost the same in value). My return calculation, after tax (10.5% + deductions) is 15.52% based on current value.

I think I may now be over the 'default' hump (i.e. in year two defaults begin to reduce) as I'm seeing my RAR creep upwards ever so slowly. Time will tell - hopefully in another 6 months those older loans will start to outweigh the new defaults (note ~80% of my loans are 5 year loans).

9892

9893

I have another loan set running at 14.84% RAR with more C's, less D's and less E's, so having the balance pretty much in the middle, seems to be working for me. I'd like to pick up some more D's and E's, but they just aren't available.

Great results, Myles. I struggle to keep to the high 13% with about 5000 current loans after 3+ years.

[beacon]

Great results, Myles. I struggle to keep to the high 13% with about 5000 current loans after 3+ years.

I'll second that. Well done Myles. I'm struggling to keep to the high 13% too, with current portfolio numbers roughly half of Cool Bear's. Also, struggling to invest much despite a steady (albeit low quantity and quality) trickle of loans ... Squirrel returns have weakened considerably and LC hasn't much volume that stays available long enough to bite into. So plodding along with Harmoney, but looking for alternatives ...

[joker]

Just doing some monthly numbers so thought I'd put up some data as it's always good to compare against others.

This represents around 18 months of investing $100K, no withdraws, 2,229 total loans.
The charge off value may look high to some, however it only represents 1.6% defaults (on loan count, almost the same in value). My return calculation, after tax (10.5% + deductions) is 15.52% based on current value.

I think I may now be over the 'default' hump (i.e. in year two defaults begin to reduce) as I'm seeing my RAR creep upwards ever so slowly. Time will tell - hopefully in another 6 months those older loans will start to outweigh the new defaults (note ~80% of my loans are 5 year loans).

9892

9893

I have another loan set running at 14.84% RAR with more C's, less D's and less E's, so having the balance pretty much in the middle, seems to be working for me. I'd like to pick up some more D's and E's, but they just aren't available.

Excellent results Myles. I've attached my charts and have unfortunately not performed as well as you. I've been in only 1 year, so missed out on scorecard 1's higher rates (up to 39.99%). I had intended to invest $100k but after the recent changes and lack of loans have gone backwards despite doubling investment to $50 per loan. After several defaults on the riskier grades combined with very few decent C, Ds available, I moved more into A & B loans. I was around 13.3% but fell after an early D2 $100 investment was charged-off. Peak was around 2161 active loans but now at 1934. Autolend isn't getting any loans and checking what's on offer regularly is too time consuming. Interestingly, my $$$ charged-off is 8% of gross interest compared to your 11% confirming that a conservative loanbook results in lower returns. I've stopped investing atm.

9894

9895

[myles]

I had intended to invest $100k but after the recent changes and lack of loans have gone backwards despite doubling investment to $50 per loan.

I'm typically investing $100 in each loan now, with regular $200 and even $400 on some of what I consider the 'safer/better' loans. With 100K it's the only way to keep funds available down, and because of the overall size, I don't see it as being particularly risky.

[Cool Bear]

I'll second that. Well done Myles. I'm struggling to keep to the high 13% too, with current portfolio numbers roughly half of Cool Bear's. Also, struggling to invest much despite a steady (albeit low quantity and quality) trickle of loans ... Squirrel returns have weakened considerably and LC hasn't much volume that stays available long enough to bite into. So plodding along with Harmoney, but looking for alternatives ...
Have you look at Zagga (previously Lendme). Not much on offer but you can invest in chunks of $1000 when available. I have been in for about 2+ years. Only less than 10 loans so far and already 2 paid back as loans are between usually 6 months and 2 years. They could do with more investors. Per $10,000 invested, I would spend a very small fraction of the time I spend on Harmoney. Another advantage is also that you do not have any cash sitting with them (unlike Harmoney and Lending Crowd). You only put in cash when and if the loan is taken up and they will give about a week's notice to do so.

[leesal]

I'm typically investing $100 in each loan now, with regular $200 and even $400 on some of what I consider the 'safer/better' loans. With 100K it's the only way to keep funds available down, and because of the overall size, I don't see it as being particularly risky.

Great going. Default rate sitting really good relative to the risk. You must be selecting well.

How many loans a week are you investing in Myles?

I'm getting around about 20, but quality not really there, so investing on the light side in over 50%

[beacon]

Have you look at Zagga (previously Lendme). Not much on offer but you can invest in chunks of $1000 when available. I have been in for about 2+ years. Only less than 10 loans so far and already 2 paid back as loans are between usually 6 months and 2 years. They could do with more investors. Per $10,000 invested, I would spend a very small fraction of the time I spend on Harmoney. Another advantage is also that you do not have any cash sitting with them (unlike Harmoney and Lending Crowd). You only put in cash when and if the loan is taken up and they will give about a week's notice to do so.

I had looked at them last year, but only E and F grades had seemed tempting. 9896

Since then they've had a C default, making their overall default rate across all risk grades and loans issued thus far to be 1.77% on a very flea base (https://www.zagga.co.nz/invest/rates-of-default ) vs 3.37% to date with Harmoney on comparatively an elephantine base, which is returning 10% RAR.

To August 2018, they had only lent approx $8 million in New Zealand and $61 million in Australia. ( https://www.interest.co.nz/personal-finance/95115/gareth-vaughan-conducts-stocktake-just-how-involved-retail-investors-are-nz). Have you taken any/all offered loans A1-F5, or just the more risky ones? If you have taken any Aussie loans too, are there any tax implications of Aussie interest earned?

[Cool Bear]

I had looked at them last year, but only E and F grades had seemed tempting. 9896

Since then they've had a C default, making their overall default rate across all risk grades and loans issued thus far to be 1.77% on a very flea base (https://www.zagga.co.nz/invest/rates-of-default ) vs 3.37% to date with Harmoney on comparatively an elephantine base, which is returning 10% RAR.

To August 2018, they had only lent approx $8 million in New Zealand and $61 million in Australia. ( https://www.interest.co.nz/personal-finance/95115/gareth-vaughan-conducts-stocktake-just-how-involved-retail-investors-are-nz). Have you taken any/all offered loans A1-F5, or just the more risky ones? If you have taken any Aussie loans too, are there any tax implications of Aussie interest earned?

The rates in your table are indicative only and are hardly adhered to at all. For example, in the table you have C4 at 7.54%. I have a C4 loan returning 14.39% net of fees (see attached). That is my highest return, the other loans are returning mostly between 6.79% and 10% (net of fees).

I do not pay much attention to the grades but more to the LVR and their credit ratings and l also scan through all the documents attached. I do look at all loans briefly and if I like one, then more closely at the documents. I commit $5k or more in each. Because they do not have that much investors yet, some of the loans ended up not filled and lapse. But it seems to be improving (more investors must be coming on board).

Not sure about the default you mentioned. One of mine did missed a monthly payment and had some trouble but in the end we got our money back with default interest as well as the LVR was very low and the borrower paid up rather than lose his asset. As the amounts are very large, they do monitor each and every loan very closely.

I am not investing in their Australia loans. Had not looked at that and no intention of doing so at the moment.

[Cool Bear]

Hi again Beacon,

Having read thru Zagga's definition of default, I am sure that "that" C default mentioned was the same one that I had. And I got all my money back! So, Zagga's "default" is really Harmoney "30 days Arrears"

[beacon]

Hi again Beacon,

Having read thru Zagga's definition of default, I am sure that "that" C default mentioned was the same one that I had. And I got all my money back! So, Zagga's "default" is really Harmoney "30 days Arrears"

Thanks, cool bear. I gave them a call. Found out that they did a mortgagee sale on that defaulting C, and there was no loss of investment capital for anyone, so clean chit so far. Also, it appears NZ domiciled investors can't invest in Australian loans at the moment. Will read up on them more. Cheers

[humvee]

https://www.harmoney.co.nz/ appears to be down at the moment

File not found.

[myles]

How many loans a week are you investing in Myles?

For 2018:
Min: 1
Max: 40
Medium: 17
Stdev: 10

Much lower of late :(

[beacon]

https://www.harmoney.co.nz/ appears to be down at the moment

File not found.

Working for me. Reboot your computer and see. Might come back on

[leesal]

For 2018:
Min: 1
Max: 40
Medium: 17
Stdev: 10

Much lower of late :(

I know, slow going.
Have eased up on the repayment/income ratio amongst other things to keep up the #s up. Taking nibbles at "not-quite-ideal" loans, while going full steam on the rare "ticks-all the boxes" types. Hopefully HM run a marketing campaign soon and increase their new business take.

[humvee]

I know, slow going.
Have eased up on the repayment/income ratio amongst other things to keep up the #s up. Taking nibbles at "not-quite-ideal" loans, while going full steam on the rare "ticks-all the boxes" types. Hopefully HM run a marketing campaign soon and increase their new business take.

They seem to be running a big marketing campaign already

For REWRITES! the rewrite rate is HUGE at the moment

[myles]

Re-writes are a double edged sword I think. On one side it means an early payout, but on the re-investment side it shows if a borrower has been able to make repayments in the past. For me, knowing that past repayments have been made (over a reasonable period of time), means that will likely continue, lowering the chance of defaults.

So I tend to favour re-writes that show good past repayment history. Something you don't know with a new borrower...

[beacon]

https://www.harmoney.co.nz/investors/lender-news/historical-annual-default-rates-now-available

Dated 30 Aug 2018, and notification on dashboard, but page is blank? Can anyone see content here?

[alundracloud]

Not on that page, but here is the link you're looking for :cool:

https://www.harmoney.co.nz/investors/default-rates

[beacon]

Not on that page, but here is the link you're looking for :cool:

https://www.harmoney.co.nz/investors/default-rates

Myles' earlier post beat me to my own lender notification. :)

[alundracloud]

Hit the $1,000 mark in interest received today, so to celebrate I thought I'd share my stats :)

Date of first investment = 5 January 2018
Total Loans invested in = 602
Average amount invested = $30.36
Average age of loan in portfolio (current status) = 124.5 days
Average weighted interest = 20.49%

RAR = 13.21%
XIRR = 11.77%

Loan Book:
A: 13 loans
B: 129 loans
C: 205 loans
D: 210 loans
E: 42 loans
F: 3 loans

Thanks to everyone that has contributed to this thread, and shared their thoughts & experiences.

9902

9901

[beacon]

Well done. You are aiming high like Myles, and that s being reflected in writeoffs, and returns. Congratulations on your first grand :)

[myles]

Good start alundracloud. I'm surprised your XIRR is below your RAR? Are you using Outstanding Principal + Funds Available as your current value? It could be right - I think my XIRR was always ahead of my RAR during the run-up stage. It could just be the timing of your investments or perhaps the 'fix' Harmoney made to their RAR calculation?

[alundracloud]

Good start alundracloud. I'm surprised your XIRR is below your RAR? Are you using Outstanding Principal + Funds Available as your current value? It could be right - I think my XIRR was always ahead of my RAR during the run-up stage. It could just be the timing of your investments or perhaps the 'fix' Harmoney made to their RAR calculation?

Thanks Myles! I've found your advice scattered throughout this thread really useful, and it probably shows when you look at my portfolio that I've tried to emulate yours somewhat, just on a smaller scale! With a bit of luck I can emulate your returns too :cool:

Below is screenshot of my XIRR worksheet. As you can see I'm using:
(Outstanding Principal + Funds Available) - (Outstanding Principal of any loans >60days in arrears)


9904

[BJ1]

This is a belated report of a first for me. Having been in the game since March 2015 I have had 262 loans repaid out of 537 subscribed and on 2nd May I had my first clearance of a loan which went full term - of 36 months. A second full term 36 month loan was repaid on 31 August. Perhaps my selection criteria have led towards loans which are easy to top up, but fewer than 1% going to term is, I think, a bit of an indictment of our debt laden society.

[myles]

There has certainly been a lot of 'churn' in the loans - some of that is likely due to changing rates through?

[joker]

[QUOTE=alundracloud;728142]Hit the $1,000 mark in interest received today, so to celebrate I thought I'd share my stats :)

Date of first investment = 5 January 2018
Total Loans invested in = 602
Average amount invested = $30.36
Average age of loan in portfolio (current status) = 124.5 days
Average weighted interest = 20.49%

They're great figures Alun - I'm very envious. Despite your loan book being high in Cs and Ds, your arrears and charge-offs are incredibly low. You've obviously got an eye for picking good loans - particularly in the current market that seems very short on them. Roll on the next $1000 :)

[humvee]

Hit the $1,000 mark in interest received today, so to celebrate I thought I'd share my stats :)

Date of first investment = 5 January 2018
Total Loans invested in = 602
Average amount invested = $30.36
Average age of loan in portfolio (current status) = 124.5 days
Average weighted interest = 20.49%

RAR = 13.21%
XIRR = 11.77%

Loan Book:
A: 13 loans
B: 129 loans
C: 205 loans
D: 210 loans
E: 42 loans
F: 3 loans

Thanks to everyone that has contributed to this thread, and shared their thoughts & experiences.

9902

9901

Those write off's are very low/good for the risk curve you have. that said at 120 days average age you have a very young portfolio, Most of the write off's dont happen until the loan is 120-180+ days in arrears so normally loans are 150-210+ days old at the youngest - so it will be very interesting to see if you can keep it up once your average age reaches ~200days

[alundracloud]

Thank you Joker- Really appreciate your kind words, and your contributions to the thread!

As Humvee points out in the post above, it's still a very young portfolio- I only really started investing in earnest in March. I'm realistic about the fact that arrears & write-offs will become more frequent as time goes on. I've definitely found myself passing on more and more loans recently- the quality just doesn't seem to be there at the moment. I'm really going to tighten up my criteria (more high B's & C's and only the "best" D's & E's) from now up until Christmas. This is based on some of the comments earlier in the thread about loans taken out in the lead-up to Xmas experiencing a higher rate of defaults.

One thing I would love to see is for Harmoney to allow the retail lenders to have a nibble at the loans that get diverted to the wholesale market. You could still have the wholesale investors taking 75-80%, but why not let the retail lenders fill the first $5k of a $25k loan before getting 'vacuumed up' by the whales? As it stands, us little-guys don't see four out of every five loans Harmoney processes.

[humvee]

I wish Harmoney would include a columns to show the following in their export All of which are missing currently

Date Charged Off
Date Sold
Date Paid Off

The closest I can do to kind of calculate the average charge off age is the following

=[@[Last Payment Date]]-[@Date] filtered for where the status is Charged off and the last payment date is NOT blank

The average of this is 457 Days - which is ALOT older/higher then I was expecting

[Cool Bear]

I wish Harmoney would include a columns to show the following in their export All of which are missing currently

Date Charged Off
Date Sold
Date Paid Off

The closest I can do to kind of calculate the average charge off age is the following

=[@[Last Payment Date]]-[@Date] filtered for where the status is Charged off and the last payment date is NOT blank

The average of this is 457 Days - which is ALOT older/higher then I was expecting
You can get the individual charge off dates for each loan in the report section. It is time consuming but I transcribe the charge off dates for all the loans charged off in each month at the end of the month into a spreedsheet. I will work on a graph later and post it here.

[Cool Bear]

You can get the individual charge off dates for each loan in the report section. It is time consuming but I transcribe the charge off dates for all the loans charged off in each month at the end of the month into a spreedsheet. I will work on a graph later and post it here.

This is my chart as promised. I have been in for just over 39 months (so in my 40th month). The chart shows that most of my charge offs are after 8 months (i.e. in its 9th month). So if you are in for only 1 year and assuming you invested gradually, your average age of your loans is only 6 or 7 months. So your charge off will not be that much yet.

[humvee]

This is my chart as promised. I have been in for just over 39 months (so in my 40th month). The chart shows that most of my charge offs are after 8 months (i.e. in its 9th month). So if you are in for only 1 year and assuming you invested gradually, your average age of your loans is only 6 or 7 months. So your charge off will not be that much yet.

I see the Charge off date in the web page now, Why can they not just include that in their data export ?

Ive got 420 Charged off and sold loans so it would take along time to do all of these manually

[Cool Bear]

I see the Charge off date in the web page now, Why can they not just include that in their data export ?

Ive got 420 Charged off and sold loans so it would take along time to do all of these manually
Yes, investing in Harmoney does take more time than other investments. But alot of it is to get information that is good to know, not all essential.

I used to update my main spreadsheet every week but now only once a month.

More on my 377 defaults in the chart above, the average is 13.26 months from date of loan and that will grow much more the longer I am in. At the moment, I am in for only 39.1 months and my oldest is 36.8 months.

The median is 11.81 months and I expect this to eventually settle at just about 12 months.

[BJ1]

5 charged off out of 262 repaid. Months in for them were 16, 29, 13, 13, 13 - the last one I have been expecting to charge off for 3 months and no payments in that time. Much the same as Cool Bear's portfolio in terms of time in versus losses. I don't worry about losses as it is part of the game, but I do wonder about Harmoney's performance in chasing bad loans - there is no reporting to investors on any audit of their processes and for all we know they could just not bother at all.

[bung5]

Wow I had a loan written off and now I see 100% of it has been recoverd. Great success !

[beacon]

One thing I would love to see is for Harmoney to allow the retail lenders to have a nibble at the loans that get diverted to the wholesale market. You could still have the wholesale investors taking 75-80%, but why not let the retail lenders fill the first $5k of a $25k loan before getting 'vacuumed up' by the whales? As it stands, us little-guys don't see four out of every five loans Harmoney processes.

I'll second that. By doing this, they'll achieve the same wholesale:retail outcomes, while upping the loan volume on both markets and minimizing the rising chatter about poor loan quality in both markets. They have been concerned about this chatter, that is why they had taken the decision to invest their own money as a wholesaler. Upping the volume also makes the sub 10% platform returns more digestible because choice was increased

[beacon]

I'll second that. By doing this, they'll achieve the same wholesale:retail outcomes, while upping the loan volume on both markets and minimizing the rising chatter about poor loan quality in both markets. They have been concerned about this chatter, that is why they had taken the decision to invest their own money as a wholesaler. Upping the volume also makes the sub 10% platform returns more digestible because choice was increased

Obviously, they'll have to dial down the autolender volume from the current 40%+ so the increased choice is available to most lenders in a fair and equitable manner.

[myles]

One thing I would love to see is for Harmoney to allow the retail lenders to have a nibble at the loans that get diverted to the wholesale market. You could still have the wholesale investors taking 75-80%, but why not let the retail lenders fill the first $5k of a $25k loan before getting 'vacuumed up' by the whales? As it stands, us little-guys don't see four out of every five loans Harmoney processes.


I'll second that. By doing this, they'll achieve the same wholesale:retail outcomes, while upping the loan volume on both markets and minimizing the rising chatter about poor loan quality in both markets. They have been concerned about this chatter, that is why they had taken the decision to invest their own money as a wholesaler. Upping the volume also makes the sub 10% platform returns more digestible because choice was increased

I might be missing what your saying, but there is a limited number of loans. The current approx. 25%/75% retail/wholesale volume split means the loans we are getting are all the loans that we will get. The only way to increase loans to retail, at that split ratio, is to increase the total number of loans, which just don't seem to be available at the moment.

Allowing the retail market to cherry-pick all loans before they go to wholesale would be unfair on the wholesale lenders, who already clearly take on the lower end of the loans. i.e. average retail RAR is around 12.2% vs average wholesale RAR around 9%.

Personally I think however Harmoney have been making the decision to split loans to retail and wholesale is okay - they appear to have been 'protecting' retailers to some degree, hence the higher average RAR of retail lenders. I'm not sure how much of this is due to historical influence (i.e. it may be changing). At around the beginning of this year the slowly growing gap between retail RAR vs wholesale RAR appears to have stopped growing and now appears to be constant or possibly even reducing. Something to watch over time. [shown in the RAR graph below]

9907

[beacon]

The current approx. 25%/75% retail/wholesale volume split means the loans we are getting are all the loans that we will get. The only way to increase loans to retail, at that split ratio, is to increase the total number of loans, which just don't seem to be available at the moment.


Let us say there are 4 loans on the market. In separate markets, retails only see 1 loan, wholesalers see only 3 - both lose. Alundracloud proposed Harmoney went back to its previous practise (my understanding) of listing all 4 on retail market first, some of which came through autolend, giving retail some time to peruse and buy them before they all unfilled portions got filled at various times (like 3pm) during the day by wholsesale. In that scenario, yes some loans were filled by retail more than 25%, but both markets had more loan volume to participate in. Thus increasing choice/diversification for both.



Allowing the retail market to cherry-pick all loans before they go to wholesale would be unfair on the wholesale lenders, who already clearly take on the lower end of the loans. i.e. average retail RAR is around 12.2% vs average wholesale RAR around 9%.


Unfair? This is P2P space. No wholesaler should be here by definition. While the borrowers should be grateful the wholesalers fill them here which they would not necessarily have done in traditional banking space, and the lenders should be grateful that wholesalers ensure more loans get filled/ get filled quicker, wholesalers should be grateful they are allowed to be in this space at all. The lending requirements are much more stringent for them in their own space. Surely, TSB et al have no cause to cry unfair when they are making a 9+% return to date on diversified lending without a dollar spent on infrastructure. Wholesalers cherry pick too through filters, albeit in a more limited way than retail, but shouldn't it be like this anyway in this asset class? At least they have a table here. The small guy doesn't even get to sit at the high tables...



they appear to have been 'protecting' retailers to some degree, hence the higher average RAR of retail lenders.


Appearances can mislead. Harmoney is a business, and they do what is viable. Without retailers, they wouldn't be in the P2P space at all. It should be in their best interest to arm investors with better information to increase their RoI, but they hide behind 'can't advice'. It should be in their best interest to help answer investor queries promptly at least about book-keeping and data reporting anomalies but one has only to read this thread to see how much lender angst and concern has been aired in more than 200 of those pages. Most of the retail lenders, including me, are still here because they have limited alternative investment choices, but a hope that with time spent here to pick loans individually there is a fair chance that they can reduce risk and lift their RAR here. In reality, in the first few years, they are really getting paid for their time, without which they will have a RAR no better than the wholesalers (who by the way, I believe spend no time loan picking).


I think Harmoney will benefit immensely if they list all loans on retail market first, and can sort out their bookkeeping and data reporting errors. Interest credited to account gets reduced the next day, defaults are added to default columns in data months after the loan has been paid off, paid off loans are still shown as current months after outstanding principal becomes 0, there are gaps/errors in loan information when they are listed, filters could be improved still, and I doubt their payment protect calculations make sense to any more than 1% of their lenders. They certainly don't balance in my books, so I hope their auditors are paying special attention to payment protect.

[BJ1]

Speaking to Harmoney last week, the current split is 85% to wholesale and not expected to change. Also, wholesale have a higher fee structure than retail and seem still to be able to clean up retail loans that sit for a while. So if we are slow to fill A grade loans they will end up in the wholesale book, further reducing wholesale RAR.

[beacon]

5 charged off out of 262 repaid. Months in for them were 16, 29, 13, 13, 13. Much the same as Cool Bear's portfolio in terms of time in versus losses.


Your performance and loan picking skills are exemplary BJ1, and your chargeoff/Gross Income ratio probably the lowest in Harmoney for your loan book age (in fact for any age>1 year, I suspect). I am sure most of us will benefit immensely should you share tips/observations with a bit more detail like Myles, Cool Bear and IntheRearWithTheGear etc. choose to do.



I do wonder about Harmoney's performance in chasing bad loans - there is no reporting to investors on any audit of their processes and for all we know they could just not bother at all.


I'll second that too, and I suspect sub 10% returns are here to stay, partly as a result of that.

[beacon]

Speaking to Harmoney last week, the current split is 85% to wholesale and not expected to change.

So, they really are a front for the wholesalers now. What a farce :t_down:
Be interesting to watch what, if anything, the regulators will do now

[myles]

I know some won't agree, but I think the definition of Peer to Peer Lending is not what some think it is.

Peer to Peer Lending is more about doing away with the middle man i.e. the Bank. (Same as P2P file sharing - doing away with the central server)

All the meaningful definitions of Peer to Peer Lending that I have seen, describe a Peer as an individual or business (yes typically a small business, but businesses none-the-less). Harmoney's model, in my view, is still Peer to Peer, it just includes some very large business peers as investors. Quite a few of the borrowers are businesses, possibly not all small, depending on your definition.

There are some platforms that are more focused on the individual/small business only model, but from my experience they are very difficult to invest in and have significantly less loan volume. It has been suggested that some of these platforms are considering allowing 'larger' investors in to 'grow' their business model.

I think it is fairly obvious that Harmoney would not be the size that it is without Wholesale investors.

Like it or not, Harmoney's model is working for Harmoney, borrowers and and most investors.

[beacon]

Peer to Peer Lending is more about doing away with the middle man i.e. the Bank.

I agree. And TSB is a Bank! Mind you, I have no problem with Banks playing here (see my previous post), so long as they do not disadvantage the native players in the P2P space. At 85% wholesale, especially when retail investors are complaining about the lack of loans and fall in loan quality, Harmoney is really not in the P2P space. P2P was supposed to disrupt the banking industry to the advantage of small players on either side of the middleman. That advantage is all but gone for retail investors (in an environment of diminishing investment returns and investment options in the country) when Harmoney becomes wholesale funded to such a large extent.


There are some platforms that are more focused on the individual/small business only model, but from my experience they are very difficult to invest in and have significantly less loan volume. It has been suggested that some of these platforms are considering allowing 'larger' investors in to 'grow' their business model.

I think it is fairly obvious that Harmoney would not be the size that it is without Wholesale investors.

Agree. I welcome wholesale funders to come and help grow this alternative industry through all platforms mulling their involvement, so long as they do not disadvantage their smaller peers, who by the way have no entry in the lending sector otherwise...


Like it or not, Harmoney's model is working for Harmoney, borrowers and and most investors.

Ignorance is bliss. Harmoney (and all P2P platforms) have a promising role to play in our society, and profit should not blindside us into letting them become mere fronts for big institutions. This industry should strive to become what it could be. A booster to all factions of local economy from the grassroots up. And that includes the small guys...

[beacon]

There are some platforms that are more focused on the individual/small business only model, but from my experience they are very difficult to invest in.

Agree. Shows more unsatisfied small investor demand. And it would become even more difficult for the small guy to invest in them if the big institutions started sweeping away in bulk what little was out there currently...

[myles]

Twisting my word a bit: "middle man i.e. the Bank.", is nothing like TSB investing as a peer.

There is no such thing as a 'native player' - nothing stopping an individual or small business becoming a wholesale investor (provided they have whatever the minimum buy in is?) - a group of peers could do it...but the returns are currently not as good. Same goes for a 'wholesale' type business investing as an individual - but paying someone to invest in loans or rely on auto-invest would likely have a poorer outcome.

What any borrower does with the money/where any investor gets the money, has little to do with it. Nothing stopping me taking out a loan from a bank and investing it in Harmoney... Nothing stopping me taking out a loan with Harmoney and investing it in a bank... For that matter, nothing stopping me taking out a loan with Harmoney and reinvesting it in Harmoney (Money for nothing - playing in the background).

The traditional savings process in a Bank *is* a form of lending i.e. you give the bank your money, they invest (lend) it however they see fit, they give you pittance back (middle man takes too much).

The only way you will dictate terms of a P2P business is to create one yourself, or convince borrowers to demand non-wholesale peers - neither, I suspect, is likely to happen. Borrowers already have that option with other platforms (though they may not know it?).

Harmoney, as far as I can tell, are still in the red, so need to make some headway to be around for the longer term - wholesale lenders contribute to that.

The most likely mechanism to attract more loans is to reduce interest rates - as an investor, that's not what I want to see...

[beacon]

nothing stopping an individual or small business becoming a wholesale investor (provided they have whatever the minimum buy in is?) -

There are millions of reasons (dollars) stopping the small guy from becoming a wholesaler. And then there's Harmoney. Try calling them about it Myles.

[BJ1]

Thanks Beacon. My first four loans were for $500 each and I lost one of those at 29 months. Initially I was keen to grow volume then I had a stern talking to myself and became more analytical. From time to time I have tweaked things but overall from then on I have used the attached templates for my investing. I work on the basis that if I weed out the obvious garbage then I already have improved my diversification so can take larger positions. Bear in mind though that I have spent a lifetime as an "anomaly analyst" assessing risk. I have been struggling to find D grade loans which meet my criteria so am well underlent in that category.

My original target return before tax was 14.50% but this got trashed by the rate reduction last year. I now aim for 14.08%, have RAR 13.75% and this month have running yield of 14.22%.

The attached loan featured last week. I asked for an explanation and was told there was a display error and that actual income was $2,486 a month. I requested that the loan be removed and represented correctly. I took a $25 position to make sure it happened. The loan was removed. So we can influence what happens but have to inconvenience ourselves to do so.

[beacon]

Thanks Beacon. My first four loans were for $500 each and I lost one of those at 29 months. Initially I was keen to grow volume then I had a stern talking to myself and became more analytical. From time to time I have tweaked things but overall from then on I have used the attached templates for my investing. I work on the basis that if I weed out the obvious garbage then I already have improved my diversification so can take larger positions. Bear in mind though that I have spent a lifetime as an "anomaly analyst" assessing risk. I have been struggling to find D grade loans which meet my criteria so am well underlent in that category.

My original target return before tax was 14.50% but this got trashed by the rate reduction last year. I now aim for 14.08%, have RAR 13.75% and this month have running yield of 14.22%.

The attached loan featured last week. I asked for an explanation and was told there was a display error and that actual income was $2,486 a month. I requested that the loan be removed and represented correctly. I took a $25 position to make sure it happened. The loan was removed. So we can influence what happens but have to inconvenience ourselves to do so.

Amazing to see you have the confidence to lend 1000 to someone unsecured, and still come out on the right side of the number line after 4 years. Hats off to you. Obviously, you prefer 36 months, but do you limit yourself to 3-25k (max loan range) loans? The D1 loan example you shared is interesting. How did you pick up on it? I had taken the info at face value and invested in it (see attached). How did Harmoney list it initially as single income, even assuming there was a typo in decimal place. I thought they checked at least the incomes of borrowers.... 9910

[BJ1]

I'll happily go below $3,000 in all grades A-E and if I like an F grade loan under $3k I'll do the odd one there. I have moved more towards 36 months as we have exceeded rationality in the global marketplace and in my view get closer to the next tumble. Being at the short end means more of my exposures have room to refinance at the long end before they get into trouble.
That D loan income was just not possible. Originally there was no co-borrower income: I wonder if it exists. The monthly repayments are well over my maximum threshold, so I was never going to invest in it (apart from the $25 I risked to check on Harmoney).
There are many anomalies on the Harmoney platform and no known audit performed. The overriding problem is that despite the issues, it remains a good vehicle for those of us seeking enhanced investment returns, so we have little choice but to accept the whole shebang - if we went to the FMA for a review that could be as good as saying sayonara P2P.

[beacon]

There are many anomalies on the Harmoney platform and no known audit performed. The overriding problem is that despite the issues, it remains a good vehicle for those of us seeking enhanced investment returns, so we have little choice but to accept the whole shebang - if we went to the FMA for a review that could be as good as saying sayonara P2P.

You cracked me up with this. I am going to be watching this space with interest anyway, to see if the regulators will do anything when the Harmoney wholesale dial moves up to 85% lent in the marketplace stats...

[beacon]

I'll happily go below $3,000 in all grades A-E and if I like an F grade loan under $3k I'll do the odd one there. I have moved more towards 36 months as we have exceeded rationality in the global marketplace and in my view get closer to the next tumble.

Ok, so I haven't understood what the max loan and max loan ranges in your template mean then... I thought they meant you only bought loans which were listed for 3k-25k.

[BJ1]

You are correct as far as my establishing the matrix, but I don't want to exclude loans below the lower limits on each grade, as they have even lower risk than my matrix, so I effectively use the matrix as 0 - 3000 and ticking all boxes will allow me to do the odd F
0-25,000 is OK for A
and so on for ones in between.
I don't consider over $25K (except I have once or twice when the repayment to income threshold was very low and the loan excess was marginal.
It's really hard to create a matrix and not subsequently find something slightly outside, but which is worthwhile.

[beacon]

0-25,000 is OK for A. and so on for ones in between. I don't consider over $25K (except I have once or twice when the repayment to income threshold was very low and the loan excess was marginal. It's really hard to create a matrix and not subsequently find something slightly outside, but which is worthwhile.

Indeed BJ1. I, on the contrary, haven't taken loan size into consideration yet, as Harmoney already has ceilings for each Risk Grade. I am also not too strict on repayment ratios, as a DSR of 35% is vouched for by many. Harmoney repayment ratios are more loosely defined than DSR, making them riskier. But as an anomaly spotter, what simple things would you advise a noob to be aware of?

[permutation]

I have read somewhere in the past that Harmoney financials are audited. Personally over the 42 months that I have invested, the financial side has always been 100% spot on according to my spreadsheet that I update daily.
There are sometimes reporting anomalies regarding loan information on the platform but less hang ups than in the early days. I feel confident in the money side of things in my account.

[BJ1]

I have no concerns about my funds Permutation - my audit interest lies in their processes and the accuracy of what they give us to make decisions on.

[BJ1]

Beacon, there is so much of what I have learnt over a lifetime in money that it is hard to impart, either in this forum or by PM. However, I will add that the majority of families need to allocate above 25% of pretax income to accommodation, be that rent or mortgage (majority, not all by any means) and so the theoretical maximum available for other finance costs should be 10%. I hardly ever lend if the repayment to after tax income exceeds 10% as it is quite likely that, no matter what the applicant says about debt consolidation, there will also be a credit card on drip feed in the background.

[myles]

The following table may be of interest to some. It shows my default adjusted return.

9917

Notes:

current interest rates are used - old rates were better/different
my selection method/criteria used - so not what someone else would get
I don't like A5's, I love F1 and F2 - all are anomalies due to low numbers
D's and E's are my money makers!

[humvee]

The following table may be of interest to some. It shows my default adjusted return.

9917

Notes:

current interest rates are used - old rates were better/different
my selection method/criteria used - so not what someone else would get
I don't like A5's, I love F1 and F2 - all are anomalies due to low numbers
D's and E's are my money makers!



Something does not quite make sense / add up

The invested column is $ or number of notes?
In $ the total invested column does note make sense
if number of notes the interest and payments columns don't make sense

[myles]

Something does not quite make sense / add up

The invested column is $ or number of notes?
In $ the total invested column does note make sense
if number of notes the interest and payments columns don't make sense

All $'s - I should have formatted them that way.

So under Defaulted Loans:
Invested: is $ invested in the loans that have defaulted (i.e. purchase of notes)
Interest: is $ of interest returned from the defaulted loans (prior to defaulting)
Payments: $ paid by borrower prior to loan defaulting
Loss: = Invested - (Payments + Interest) $'s [i.e. what I lost from initial purchase of notes)

Total Invested: is total $'s I have invested in that grade (all loans)

The rest should be obvious?

[humvee]

All $'s - I should have formatted them that way.

So under Defaulted Loans:
Invested: is $ invested in the loans that have defaulted (i.e. purchase of notes)
Interest: is $ of interest returned from the defaulted loans (prior to defaulting)
Payments: $ paid by borrower prior to loan defaulting
Loss: = Invested - (Payments + Interest) $'s [i.e. what I lost from initial purchase of notes)

Total Invested: is total $'s I have invested in that grade (all loans)

The rest should be obvious?

Ok that makes more sense thanks

[Snow Leopard]

The following table may be of interest to some. It shows my default adjusted return.

9917

Notes:

current interest rates are used - old rates were better/different
my selection method/criteria used - so not what someone else would get
I don't like A5's, I love F1 and F2 - all are anomalies due to low numbers
D's and E's are my money makers!




I believe you are calculating your losses wrong:

On the A5 $50 you have lost $43.13 of capital and also lost $1.185 of interest (I assume the IR are annual & we are working over 1 year) for a total loss of $44.315

Or if you like:
You put $500 in and get back $510.64

Your RoR is actually 2.13%

[Cool Bear]

Hi Myles

Thanks for sharing.

In addition to Snow Leopard's point, you also did not take into account fees. Assuming your fees is 15%, then following the same A5, you paid 15% on the 10.99% interest received. But you lose the "whole" write off.

One year calculation (assuming no arrears) and taking the case of the A5.
You invested a total of $500 and you had one charge off of $50. Your interest received is $450x10.99% + $4.31 (that $50 charge off) = total interest $53.77 for the year. Less 15% fees is $45.70

Less principal written off $43.13 = net gain after fees of just $2.57. So you end up with just $502.57 at the end of the year or a return of just 0.51% (not the 3.23% in your table).

Fees affect the higher grades more.

[Cool Bear]

Hi Myles

Thanks for sharing.

In addition to Snow Leopard's point, you also did not take into account fees. Assuming your fees is 15%, then following the same A5, you paid 15% on the 10.99% interest received. But you lose the "whole" write off.

One year calculation (assuming no arrears) and taking the case of the A5.
You invested a total of $500 and you had one charge off of $50. Your interest received is $450x10.99% + $4.31 (that $50 charge off) = total interest $53.77 for the year. Less 15% fees is $45.70

Less principal written off $43.13 = net gain after fees of just $2.57. So you end up with just $502.57 at the end of the year or a return of just 0.51% (not the 3.23% in your table).

Fees affect the higher grades more.

And if you cannot deduct the $43.13 principal written off from your taxable interest, then you would have actually lost money on this one! Even worse if fees are also not deducted for tax purposes.

[beacon]

Beacon, there is so much of what I have learnt over a lifetime in money that it is hard to impart, either in this forum or by PM. However, I will add that the majority of families need to allocate above 25% of pretax income to accommodation, be that rent or mortgage (majority, not all by any means) and so the theoretical maximum available for other finance costs should be 10%. I hardly ever lend if the repayment to after tax income exceeds 10% as it is quite likely that, no matter what the applicant says about debt consolidation, there will also be a credit card on drip feed in the background.

Thank you BJ1. Be interesting to watch how the results unfold - your cautious ABCs vs Myles daring CDEs vs Cool Bear Index ( I think he's closest to being an index, out of all who care to consistently share here). Looks like a sunny day all around for Harmoney fans today. Enjoy the sunshine, all! :)

[myles]

I take the comments above, but the point I'm trying to show is the rate/value of defaults per grade. Defaults are not annual, they are total over the life of all loans - the %Loss is based on total invested value per grade, not current or final value (so loss of potential interest is not included).

I take Cool Bears point on fees, so I've added that in - it had no effect on the overall trend, but it could have. Tax is at a portfolio level so I'm not including it deliberately.

I know the last column is meaningless, but I find it to be indicative of the return for the grade.

Updated with 15% loss due to fees:

9918

The key thing I take from these values is that the expected, larger default losses for higher grades is not what I'm seeing. So selection criteria can impact expected defaults and averages - significantly.

[Cool Bear]

Myles, I agree with your point on that the higher grades may end up having better returns but the true results comes only when all loans in a cohort have seen out their terms.

However, my point on the fees is more about your last two columns - fees on interest from the performing (non charged off) loans. The fees on interest from the non-performing (charged off) loans would hardly affect the returns as you rightly point out.

[myles]

The chart below shows the age spread of both my current loans and loans that have defaulted.

Orange: Age spread of current loans - scale on the left axis (example: there are 130 loans that are 15 months old)
Blue: Age spread of defaulted loans - scale on the right axis (example: 4 loans defaulted 6 months after purchase)

9920

I have no clue why month 8 and 9 are so low in relation to loans defaulting - just an anomaly due to low number of overall defaults at this point in time I guess.

An informative graph I think - for my loan set it shows that a good portion (~35%) are now out of the 'default' danger zone.

Notes:

Loan default date is taken as charged-off date, not last payment date.
Three of the charged-off loans are currently still being paid...Harmoney data errors......
This would be a great graph to have time-lapsed, but it's just too much work to be bothered...

[myles]

Another graph that helps paint a picture of loan characteristics:

Orange: Age spread of current loans.
Green: Age of paid off loans.

9922
So a large portion of my loans are repaid at the 4th month through to at least the 8th month.

Notes:

Around 80% of my loans are 60 month term loans
In 18 months I have purchased over $220,000 worth of loans from a total deposit of $100,000 (no withdrawals)
The last interest rate adjustment may have had a significant impact on the timing of paid off loans?
It's worth noting that the original $100,000 was invested in the first 3 to 4 months, all loans purchased after that have been paid from $'s returned from paid off loans and interest.
I have been increasing loan size in recent times (~ 4-6 months) to help keep up with re-investment (not represented in the graph - I should do the same graph but use $ value?)
Around 35% of my original $100,000 loans have progressed past 14 months!

[myles]

Something that I found when looking through my data set is that none of the re-written loans have defaulted!

This could be partly due to timing and the limited time frame of my loan set, but I find it very interesting.

Cool Bear, is this something you could chart with your extended data set? Just the same as your previous default graph, but only include loans that have previously been re-written i.e. positive value for Previous Loan Pay-off (re-write)​ column.

[Saamee]

Something that I found when looking through my data set is that none of the re-written loans have defaulted!

This could be partly due to timing and the limited time frame of my loan set, but I find it very interesting.

Cool Bear, is this something you could chart with your extended data set? Just the same as your previous default graph, but only include loans that have previously been re-written i.e. positive value for Previous Loan Pay-off (re-write)​ column.

30 Months ago we opened a HM account for my wife.

Specifically we invested Only in Re-Writes and also only in the Maximum Re-Write allowed for that Grade of loan.

Pleased to report that No Loan has every Defaulted or been Over due with payment over that time.

[humvee]

30 Months ago we opened a HM account for my wife.

Specifically we invested Only in Re-Writes and also only in the Maximum Re-Write allowed for that Grade of loan.

Pleased to report that No Loan has every Defaulted or been Over due with payment over that time.

I dont have any Write offs on rewrites - I do however have a number of arrears , hardship, protect waivers etc
Including some that are 180+ days in arrears

9924

[leesal]

I take the comments above, but the point I'm trying to show is the rate/value of defaults per grade. Defaults are not annual, they are total over the life of all loans - the %Loss is based on total invested value per grade, not current or final value (so loss of potential interest is not included).

I take Cool Bears point on fees, so I've added that in - it had no effect on the overall trend, but it could have. Tax is at a portfolio level so I'm not including it deliberately.

I know the last column is meaningless, but I find it to be indicative of the return for the grade.

Updated with 15% loss due to fees:

9918

The key thing I take from these values is that the expected, larger default losses for higher grades is not what I'm seeing. So selection criteria can impact expected defaults and averages - significantly.

Further to Coolbear and Snow Leopard, That analysis although interesting overlooks much. Defaults, will create a drag on your return - due to the capital not being recuperated so interest is foregone.

Fee should be applied against all interest.

Early repayment amplify's the impact of default, especially in the higher grades. Without the benefit of your data, would say your E5 grade is returning closer to 12% rather then 19%. See attached.

9930

That said your DEF grades are performing very nicely, and well below the predicted static loss ranges indicated by HM, so you must a knack for risk selection

[myles]

Early repayment amplify's the impact of default, especially in the higher grades. Without the benefit of your data, would say your E5 grade is returning closer to 12% rather then 19%. See attached.

I re-invest 'early repayments' - so shouldn't the months be 14 with the associated increased interest and fees?

This wasn't the point I was trying to highlight. The point was the %Loss column - for my loans it is clearly more advantages to invest in higher grade loans based on loss due to defaults (when interest is taken into account). Compare the %Loss column for B5 vs D4 or B4 vs E3 and then consider what the return for each will be... Higher grade loans, for my loan set, are not showing increased default losses as would typically be expected (include the interest gain and it should be obvious how significant the gain is).

[leesal]

I re-invest 'early repayments' - so shouldn't the months be 14 with the associated increased interest and fees?

The reinvestment principal is independant, so in the case of E5 - if you were to reinvest the returned capital back into a E5 loan it should have the same characteristics and return 12% in this example (eg expected default of 4.5% per year, 35%pa of early repayment, etc).






This wasn't the point I was trying to highlight. The point was the %Loss column - for my loans it is clearly more advantages to invest in higher grade loans based on loss due to defaults (when interest is taken into account). Compare the %Loss column for B5 vs D4 or B4 vs E3 and then consider what the return for each will be... Higher grade loans, for my loan set, are not showing increased default losses as would typically be expected (include the interest gain and it should be obvious how significant the gain is).

Agree with that, you are showing incredible risk selection at the DEF grade. I find it incredible that your D grades are outperforming your C's. Your E grades are showing a static loss of 4%, HM are showing a static loss of 7.7% on the 2017 cohort. So you are doing 50% better then the platform, a impressive record!

[myles]

I don't agree with your calculation - as per my previous comment - early repayments are earning interest not included in your determination of 12% - defaults have already been factored in for all loans (these were actuals for the full period, re-investment included).

I've calculated my actual return for just those E5 loans as 16.99% (pre tax), 19.98% without fees.

Some of the original loans are still current and earning 38.25% interest :) [rates over the period include: 38.25, 26.95, 28.69]

This was why I approached the comparison from the actual loss side, much easier to calculate than trying to calculate the actual gain, which has to be done on an individual loan basis...and why it is pointless generalising the final value...

[Calculated by weighting individual returns and annualising both returns and default losses.]

[Cool Bear]

Something that I found when looking through my data set is that none of the re-written loans have defaulted!

This could be partly due to timing and the limited time frame of my loan set, but I find it very interesting.

Cool Bear, is this something you could chart with your extended data set? Just the same as your previous default graph, but only include loans that have previously been re-written i.e. positive value for Previous Loan Pay-off (re-write)​ column.
Will try but have to be in a month or two as I will be travelling.

[leesal]

I don't agree with your calculation - as per my previous comment - early repayments are earning interest not included in your determination of 12% - defaults have already been factored in for all loans (these were actuals for the full period, re-investment included).

I've calculated my actual return for just those E5 loans as 16.99% (pre tax), 19.98% without fees.

Some of the original loans are still current and earning 38.25% interest :) [rates over the period include: 38.25, 26.95, 28.69]

This was why I approached the comparison from the actual loss side, much easier to calculate than trying to calculate the actual gain, which has to be done on an individual loan basis...and why it is pointless generalising the final value...

[Calculated by weighting individual returns and annualising both returns and default losses.]

Hi Myles. The intriguing thing about your data, is your loss on the lower grades being significantly less. If you select well, you can exploit thoses pockets, at the lower grades.

What we have to consider, given the age of our portfolios (both being immature), is how each individual cohort will run. By continually repurchasing, you will be witnessing the performance of a mixture of cohorts with a younger average loan age - higher interest relative as a portion of monthly repayments, less loans reaching 120-180 days in arrears etc.

HM annual average default is misleading. Rather I prefer to look at cohort default across the full term. Taking HM forecasted stats for Grade "E", their default forecasts are approx 4.5% per annum, or 22.5% across a 5 year term. To validate this, taking the 2014 E grade performance off the "historical annual default rate tool " https://www.harmoney.co.nz/investors/default-rates - shows that the cumulative default of E grade at 22.7% (and running to a similar place on 2015 and 2016 cohorts). Critically the definition of cumulative default is based on the number of loans originally funded, not the loans outstanding.
How is the cumulative default rate calculated?The cumulative default rate is calculated by dividing the total number of defaults by the total number of loans funded. For example in 2015, for grade C3, 447 loans were funded and 17 loans defaulted to the end of 2017 creating a cumulative default rate of 3.8%.
How that reads to me, is early repayment is not factored in. If HM were to publish annual default based on time in lent, the number would be significantly different. ie If 22% of your E grade loans are going to default, and 78% remain good - how are your stats going to look if 40% of the good ones repay early in the first 12 months!

To run some really crude numbers, here is a mocked up example on 5 year on E5. I've used heuristics to make the stats less complicated (no hazard curve, timing of cash at start of period).

9931

Ultimately I'm not in disagreement with the part of your analysis that compares relative defaults between the grades. If you can select DEF grades which will default at the same rate as BC's - then fantastic. And those lucky enough to get in at 38.25%, kudos and am jealous. But rather trying to throw questions for those who may otherwise assume that 20% gross returns are readily achievable at todays rates.

[myles]

I would do the calculation as below. I'm not sure where your repayment values are coming from in your second table?

9933

Notes:

The second table shows re-investment of both paid-off loans and interest, as well as cumulative defaults (if only you could cash out like this).
The first table doesn't allow for 5 years due to fund shortfall at 4th year - so I just paid it out at that point.

[leesal]

I would do the calculation as below. I'm not sure where your repayment values are coming from in your second table?

9933

Notes:

The second table shows re-investment of both paid-off loans and interest, as well as cumulative defaults (if only you could cash out like this).
The first table doesn't allow for 5 years due to fund shortfall at 4th year - so I just paid it out at that point.



You are on the right track. I mucked up the 2nd table, and for that matter the 1st wasn't right either - double counting defaults. I've refined again :) Works out at somewhere between 12-15%.
In that simple model, if are able to achieve a default of 3% pa (or 15% over the term), return lifts to just under 20%.


9936

[leesal]

This is the analysis I'm running for my Cohorts.

For each cohort population (by month), I've taken HM interest rate and annual default rates. Using this data & early repayment date i'm able to track the expected performance through the loan term.

Shows that my current cohorts are running at approx 15.1% after fee, against expected RAR of 14.5%. Am showing that overall full term RAR is projecting at 10.5%. Which reflects the much lower expected RAR under platform 1.5 pre May18.

Note - am only modelling cohorts older then 6 months, to allow early repayment data to settle down.

9941

[humvee]

Market place is Busy this morning, 11 Loans - 100% rewrites, a number of good ones

Unfortunatly Ive moved most the my spare $ to lending crowd so almost none available to invest,


But Ill bet the money comes flooding back into my account once these loans are gone due to early repayments

9942

[myles]

First time I've been < $25 available funds for a long time :)

[IntheRearWithTheGear]

Did you catch the defaulties ? in a few of them.

[humvee]

Did you catch the defaulties ? in a few of them.

I didn't spot that - but I only looked enough to pick what I had $ for
No defaults in any of the 6 still listed and none on the one I invested in

[humvee]

Market place is Busy this morning, 11 Loans - 100% rewrites, a number of good ones

Unfortunatly Ive moved most the my spare $ to lending crowd so almost none available to invest,


But Ill bet the money comes flooding back into my account once these loans are gone due to early repayments

9942

I forgot I had my C D E F Grade filter on when I did screenshot - so there would have been more loans available then that

[humvee]

First time I've been < $25 available funds for a long time :)

Dont expect it to last - expect the early repayments to arrive any second now ......

[leesal]

I didn't spot that - but I only looked enough to pick what I had $ for
No defaults in any of the 6 still listed and none on the one I invested in

yep there was a B grade default, although you wouldn't have seen that on your filter. Didn't see any other defaulter though!?

Managed to plough a good amount in this morning, my "weekly" deposits have been turning into daily ones - certainly great news for HM users - even if most are rewrites....

[myles]

Another graph...trying to get a feel for loan pay offs:

9943

Blue: Number of loans (held in month)

shows my initial ~3 month 'buy in' period
followed by slow increase due to reinvestment of interest over time
more recent slight decrease as I purchase more notes per loan (so number of loans decreasing)


Orange: Loans paid off (in month)


appears to lag number of loans by around 6 months (i.e. significant loans paid off at ~6 months)
first, large peak - most likely due to the interest rate adjustment in Aug/17 that saw a huge fall in rates (so wise borrowers rewriting loans)
second, smaller peak, not sure, (i) an 'echo' 6 months on from the first peak or (ii) a post Christmas anomaly? (probably an 'echo')


Notes:

I'll continue to purchase more notes per loan, which should see the overall loan number drop, and 'workload' (reinvesting rewrites) reduce.
A general view of paid off loans, for me, appears to be a pay off rate of around 5-6% of loans per month, so 60-70% of loans rewritten each year.
Difficult to see the trend, but I'm not liking the slow rise toward the end :(

[leesal]

Another graph...trying to get a feel for loan pay offs:




A general view of paid off loans, for me, appears to be a pay off rate of around 5-6% of loans per month, so 60-70% of loans rewritten each year.
Difficult to see the trend, but I'm not liking the slow rise toward the end :(



Huge repayment rate. Would have thought your lower grades had a would have less rewrite/repays.

[leesal]

30 Months ago we opened a HM account for my wife.

Specifically we invested Only in Re-Writes and also only in the Maximum Re-Write allowed for that Grade of loan.

Pleased to report that No Loan has every Defaulted or been Over due with payment over that time.

I'm avoiding a lot of those "maxed out loans", under the thinking that the higher debt/income ratio would result in repayment difficulties - with no ability to rewrite out of trouble.

Incredible result Saamee. What type of risk grades are you investing in? Is it a large portfolio?

[IntheRearWithTheGear]

Some new noob/whale is sucking them loans up today lickte split - most likely doesn’t know about loan diversity.

[leesal]

Some new noob/whale is sucking them loans up today lickte split - most likely doesn’t know about loan diversity.'

It could be the institutions, they have the ability to hover-up the retail portal.

That said, am happy with the recent availability. Have picked up over 40 individual loans since Monday - wasn't long ago would be lucky to get that in a month.

[Soolaimon]

41 loans in the last 24 hours, so they say but I only saw one. And I check several times a day. And, yes I also got quite a few earlier in the week, but struggling again now to invest as I want.

[alundracloud]

41 loans in the last 24 hours, so they say but I only saw one. And I check several times a day. And, yes I also got quite a few earlier in the week, but struggling again now to invest as I want.

I'd believe it. I saw 34 loans y'day. There were a whole bunch that released about 10.15am. You do have to get in quick, however, though not as quick as Lending Crowd. How anyone manages to get any money invested there is beyond me.

[Soolaimon]

Just checked and there were 4 loans there and I only managed to get one and that was not one I would normally invest in.
It is starting to be like lending crowd here.

[leesal]

Certainly were 41 loans yesterday. Picked up a good deal of those

9967

You are right to an extent Soolaimon, that need to be quick on the uptake. However unlike LC, at least there is the volume currently and the option of autoinvest. Even if loans don't linger around for hours anymore. Several of the loans I'm getting the "RED SCREEN" (coincidently as I type - attached). Think that the red screen indicates a Big Fish (or several biggies) are attempting to buy the loan out in its entirity.

9968

[beacon]

Certainly were 41 loans yesterday. Picked up a good deal of those... I'm getting the "RED SCREEN" (coincidently as I type - attached). Think that the red screen indicates a Big Fish (or several biggies) are attempting to buy the loan out in its entirity.

9968

I'm happier with increased volume too, regardless of how many or few I choose to finally invest in.
I think this error comes when system is updating your account leesal, with interest or repayments etc., but I think the loan gobbling activity by whales is under check at the moment...

[leesal]

I'm happier with increased volume too, regardless of how many or few I choose to finally invest in.
I think this error comes when system is updating your account leesal, with interest or repayments etc., but I think the loan gobbling activity by whales is under check at the moment...

Most lurk for 10-20 mins. Clearly with my volumes its long enough for me :)

Investment method has had to adapt though, my last autolend loan was back in April.

[humvee]

I was going to do some reporting on my 36 month loans older then 36 months..... then I came across this

How is this 36 Month loan still active and Current after 43 months with no payments since Feb

9972

[BJ1]

Be happy Humvee - an F3 loan that went the distance and met every payment. A good result I say. The reporting is just nonsense as so often happens. Send them an email and they'll fix it.

[leesal]

Be happy Humvee - an F3 loan that went the distance and met every payment. A good result I say. The reporting is just nonsense as so often happens. Send them an email and they'll fix it.

36% interest too. Wow! Humvee, interested to see your numbers from your closed off, if making them available.

Also a banging the gong moment - just hit the 50k invested across all P2P platforms today. Barring a GFC, I'll be aiming for 100k by Aug19.

[RMJH]

36% interest too. Wow! Humvee, interested to see your numbers from your closed off, if making them available.

Also a banging the gong moment - just hit the 50k invested across all P2P platforms today. Barring a GFC, I'll be aiming for 100k by Aug19.
Would you be willing to share your thoughts on diversification strategy? I am really struggling to maintain my portfolio but am probably way too diversified. Even after doubling my investment per loan I will remain in the 1000's long term which makes growth impossible.

[leesal]

Would you be willing to share your thoughts on diversification strategy? I am really struggling to maintain my portfolio but am probably way too diversified. Even after doubling my investment per loan I will remain in the 1000's long term which makes growth impossible.

I'm sure others have a much better handle.

Am treating all P2P as if it were rolling 18 month loans, so taking it from an investment perspective. To reach 100k from 50k now, am assuming approx 33k will be repaid, so needing to invest approx $1600 a week to reach that target.

Using that as a rough guide. From there have individual approaches toward selection criteria on 3 P2P sites. If am not getting enough loans will adjust onto another site, but so far hasn't been a problem. Currently am investing approx 3k per week at pretty small loan sizing, there is plenty of slack should the availability dry up.

[RMJH]

I'm sure others have a much better handle.

Am treating all P2P as if it were rolling 18 month loans, so taking it from an investment perspective. To reach 100k from 50k now, am assuming approx 33k will be repaid, so needing to invest approx $1600 a week to reach that target.

Using that as a rough guide. From there have individual approaches toward selection criteria on 3 P2P sites. If am not getting enough loans will adjust onto another site, but so far hasn't been a problem. Currently am investing approx 3k per week at pretty small loan sizing, there is plenty of slack should the availability dry up.
Thanks. I will just gradually ramp up number of units per loan over say 12 months. Given the erratic number of loans becoming available I don't want to be left exposed with poor diversification on the new cohort.

[myles]

I think a good guide to diversification is to try to average around 0.25% of total investment with a strict maximum of 1%, per loan.

So, if you have $10,000 invested, an average around $25 per loan with a maximum of $100 per loan.

That equates to around 400 loans, irrespective of investment size, which I think is manageable from a time input point of view. Any more than this, when volume of loans is not high, means having to select loans of poorer 'quality' just to maintain diversification - a poor trade off in my opinion (but no doubt debatable).

I've currently got a little over 1200 loans (0.1%) and, although manageable because I have the time, if I go off line for a week, it can take a couple of weeks to get on top of it again.

My thoughts only...I'm working to reduce my total number of loans ;)

[An old article that provides some good numbers around this: https://www.lendingmemo.com/risk-diversification-p2p-lending/]

Caveat of the above worth thinking about:

timing of loans - a good spread throughout the year will also ensure diversity as I think there are periods of the year that present more risk than others (e.g. lead up to Christmas)
manually select loans - if you rely on auto-lend you can potentially get some 'dodgy' loans
if you only want to chase an average return ignore the above and invest the minimum amount ($25) in as many loans as available


If you consider the above - investing in one or two loans each day would do it - not hard to do, provided loans are available...

[RMJH]

I think a good guide to diversification is to try to average around 0.25% of total investment with a strict maximum of 1%, per loan.

So, if you have $10,000 invested, an average around $25 per loan with a maximum of $100 per loan.

That equates to around 400 loans, irrespective of investment size, which I think is manageable from a time input point of view. Any more than this, when volume of loans is not high, means having to select loans of poorer 'quality' just to maintain diversification - a poor trade off in my opinion (but no doubt debatable).

I've currently got a little over 1200 loans (0.1%) and, although manageable because I have the time, if I go off line for a week, it can take a couple of weeks to get on top of it again.

My thoughts only...I'm working to reduce my total number of loans ;)

[An old article that provides some good numbers around this: https://www.lendingmemo.com/risk-diversification-p2p-lending/]

Caveat of the above worth thinking about:

timing of loans - a good spread throughout the year will also ensure diversity as I think there are periods of the year that present more risk than others (e.g. lead up to Christmas)
manually select loans - if you rely on auto-lend you can potentially get some 'dodgy' loans
if you only want to chase an average return ignore the above and invest the minimum amount ($25) in as many loans as available


If you consider the above - investing in one or two loans each day would do it - not hard to do, provided loans are available...
Thanks Myles. I have about 2500 active loans and about 15% sitting there in cash having been away for a couple of weeks! I don't read the stories, just use basic filters but mainly rely on diversification to get 13%. With 50% annual churn/repayment I think about 10 loans a week would keep my portfolio level if I increased investment in each loan by 50%. I guess that is still pretty conservative and it wouldn't take so long to build a somewhat mathematically diversified cohort even without a phased increase. The alternative of dropping my filters would be less attractive!

[myles]

A couple of charts that are an attempt to find loans that are more likely to default than others. These are based on my loan set so may differ from others and some of my criteria may limit some details showing up.

The number in the brackets after the description is the sample size for that group.

9976

Nice data-set that highlights that some borrower cohorts appear to be more likely to default than others. I find it interesting that a De Facto relationship is lowest in that group. I haven't taken a loan from a 'boarder' for a long time, but some of my earlier loans were. Most other details are kind of what you would expect I think. The 'Home' income type stands out from the rest (still not 100% sure what it is defined as).

9977

There was some discussion a long way back suggesting borrowers location might influence defaults - this chart certainly suggests that might be the case. Note I split out the smaller sample size regions just for clarity. Other regions, for me, have not had a default.

Hope there are some details here that are useful to others for 'picking' loans.

Just as an example, so it's clear what these are showing - I have had (or still have) 14 loans from borrowers residing in Timaru, just under 15% of those loans have defaulted (so that would be 2 out of the 14). [The 14 is in the brackets after 'Timaru'.]

[IntheRearWithTheGear]

Their model takes into account all the easy stuff such as location, wage, sex, working status etc into account - so i dont think there a holy grail for better selection from our lender point of view. Their model would most likly take into account that in auckland if a loan is submitted at 23:44 at night by sombody earning 14000 per month it should be marked as a loan default etc.

At the end of the day they see more data about the client POPULATION to classify the loan than we do - so it simply comes down to a choice. All we have is the single loan application.


One thing i thought would be interesting is picking defaults from spelling mistakes in the free text field.

I suspect the harmony model dosnt evaluate this "idea", in its classification. I suspect they dont even use this field in their models and as such could be a further advantage. (however we still dont have enough data to it) (yes, i seen the study in regards to religious words).

[Bjauck]

Their model takes into account all the easy stuff such as location, wage, sex, working status etc into account - so i dont think there a holy grail for better selection from our lender point of view. Their model would most likly take into account that in auckland if a loan is submitted at 23:44 at night by sombody earning 14000 per month it should be marked as a loan default etc.

At the end of the day they see more data about the client POPULATION to classify the loan than we do - so it simply comes down to a choice. All we have is the single loan application.


One thing i thought would be interesting is picking defaults from spelling mistakes in the free text field.

I suspect the harmony model dosnt evaluate this "idea", in its classification. I suspect they dont even use this field in their models and as such could be a further advantage. (however we still dont have enough data to it) (yes, i seen the study in regards to religious words). Interesting - is a simple mistake or lack of proof-reading before clicking on submit just a slip or symptomatic of stress hich could precede a meltdown and default?

Errors based on lack of education could well be already reflected in the grade given to the loan application.

[IntheRearWithTheGear]

Somtimes you can guess gender from the words used in the description field.

example "I brought the house off my x hubby" - hence female.

Do females statistically pay back better than males ?

Obvously harmony knows gender in the loan application - us as a lender do not.

So i do think there is value in the field.

[myles]

A couple more:

9978

Some interesting detail in the above chart worth considering. Looks like skipping 'Tax Bills, New Cars and Funeral Expenses' might be a good option. 'Loan to Family Members' surprises me, but relatively low numbers.

9979

Take with a grain of salt, but I thought it of interest. This relates only to my loan set and selection criteria. A single default in the A5 grade with only 10 loans makes it look bad. However, I will likely dial down my E4 and E5 intake (though I need to look a bit further into it as there may be some influence due to earlier, much higher interest rate loans).

9980

'Previous Defaults' are not as bad as I would expect (but low numbers - by choice). 'Enquiries in last 6 months' looks okay up to 3, perhaps even 5 considering my overall average default rate.

[alundracloud]

I've not seen this before- These two loans hit the marketplace at 0% filled (as if they hadn't gone through the auto-lend) and with only 11 days time remaining, usually 14 days.

9981

[joker]

A couple more:

9978

Some interesting detail in the above chart worth considering. Looks like skipping 'Tax Bills, New Cars and Funeral Expenses' might be a good option. 'Loan to Family Members' surprises me, but relatively low numbers.

9979

Take with a grain of salt, but I thought it of interest. This relates only to my loan set and selection criteria. A single default in the A5 grade with only 10 loans makes it look bad. However, I will likely dial down my E4 and E5 intake (though I need to look a bit further into it as there may be some influence due to earlier, much higher interest rate loans).

9980

'Previous Defaults' are not as bad as I would expect (but low numbers - by choice). 'Enquiries in last 6 months' looks okay up to 3, perhaps even 5 considering my overall average default rate.

Thanks for the data Myles. It's fantastic. How are you capturing it all? Are you entering it all manually in Excel, do you work it via Harmoney's reports or do you have a more sophisticated system? I'm interested in collating my data similarly. Cheers

[myles]

How are you capturing it all?

Up until this last lot of graphs I was just using a spreadsheet, but now that I feel that I have some useful data to mine I import it into a database. Just using the Harmoney Report Loans Export data (csv).

What I'm currently using (I've got half a lifetime of IT/Programming/DBA experience):

sqlite3 (https://sqlite.org):

great little public domain (free) database, perfect for this sort of thing (helps if you know SQL and it's power)
simple import of the csv file and then a bit of a tidy up of the data to get it in the correct datatypes etc.


gnuplot (http://www.gnuplot.info):

one of the best plotting tools available IMO and open source
It's been a long time since I've used gnuplot so having to re-learn a few things - hoping to try out some 3D graphs down the track if I can find the data to make it useful.


make (https://en.wikipedia.org/wiki/Make_(software)):

just a unix build automation tool which 'glues' it all together i.e. import csv file, data tidy up (with a bit of SQL), and then generate all the graphs.


Probably sounds more complicated then it is, but I'm finding it much better than a spreadsheet and it only takes seconds to regenerate all the graphs etc. and it's easy to add to over time.

[leesal]

Great data Myles! Very useful

Some of the data is too thin to draw meaningful conclusions though - eg "tax bills" as a lending reason having one default in 12 loans, or enquiries in the higher categories.

Items I found interesting, I'm only considering your data with a certain level of significance

Renting/Boarding vs Home ownership - suprised to see renting performing so badly and at similar levels of default to boarding

In a relationship vs alone

urban vs rural

business cash flow and household items categories stand out as performing badly.

Good work, keep the analysis rolling in :)

[RMJH]

Yes, good work. Would be good to use the whole data set! Or even pool our data if that could be done anonymously and securely.

[myles]

urban vs rural


Just in case the region chart was misunderstood - the split between population >10 <=10 (i.e. blue/orange) was based on the population in the data group, not the population of the region.

[myles]

More:

9986

Plot of 'loan payment' / 'income' ratio - in general a rise to the right, as expected - not at all clear cut though. Might need to include more info e.g. loan size, grade?

9987

Does not include groups with less than 10 to try to 'lift' the detail, but it needs to be interpreted - in general the 'more gaps' to the right suggests the longer the better (outliers hide the detail).

9988

Added two more to this one:

payment protect doesn't have the big jump that some thought it might (they are higher though)
re-writes stand out (for me at least)

[beacon]

Several of the loans I'm getting the "RED SCREEN" (coincidently as I type - attached). Think that the red screen indicates a Big Fish (or several biggies) are attempting to buy the loan out in its entirity.

9968

Seems you were onto something, leesal. Have been observing for this since you hinted at the possible connection. Big lumps are being filled and note availability fall fast in many loans, as I'm being served this error screen in many loans too - and repeatedly as I retry for fills

[leesal]

A huge pile of loans on.

Further to the red screens - am getting them consistently when placing. Could it be system overload?

In those loans, a D5 with no less then 5 defaults recorded. Has to be a typo surely! Also a rewrite with 16 successful payments.

9992

[leesal]

Just in case the region chart was misunderstood - the split between population >10 <=10 (i.e. blue/orange) was based on the population in the data group, not the population of the region.

Yes I did catch that, but forgot that you excluded the regions without claims, most of which would have been rural locations

A lot of the data is confirming what most would expect. Good way of mining insights, won't ever tell the full story, but helps paint an overall picture. Payment protect having a higher default % was something I hadn't considered - wonder whether their is a difference in grading mix between those on PP and those without.

[myles]

wonder whether their is a difference in grading mix between those on PP and those without.

Numbers start to be a bit dodgy at those levels - pretty much across the board for those with significant detail (an obvious bump up in E). Partial PP looks like a waste of time and the values are too small to have much meaning.

9993

Note: This could be influenced by other criteria that I use to select loans e.g. loan/income ratio?

[humvee]

Well I've sent harmoney a large list of loans that have extremely obvious reporting errors

Broken down into the following main areas

Showing as Paid off but still owe money = 67
Showing as Current but $0 owing = 54
Negitative outstanding principal = 17


They have said "The team has been made aware of the loan IDs and problems with each as detailed in your email and look to have this corrected soon. I don't have a timeframe at this stage as the list of loans with errors is, as stated, large."

Only time will tell how long they will take to fix these

[myles]

Trying to come up with some charts that give a good overview of a portfolio. These two I think give a lot of condensed detail:

9998

This show the age of all loans (top of yellow), current loans (height of yellow) and paid off loans (pink).

Also shows the 'hazard curve' ~ where loans are defaulting, as well as where loans are going into arrears. (hazard curve similar to Harmoney's but needs a bit more time to develop)

Interesting for me is that arrears are appearing more frequently in older loans, but that is still where the bulk of my 'current' loans are.

The 'Paid Loans' plot shows major loan 'churn' between months 5 and 10 - it will tail off to the right as time goes on.

The yellow 'horn/wave' on the right is my 'startup' loans moving through.

9995

Overview of the status of all loans per grade. The issue will be that the 'Paid Off' area will push down everything over time - I did try weighting newer loans over older loans which looked good but values are then meaningless.

Any thoughts/comments on improvement? You do have to spend a bit of time figuring out the detail they are showing.

[myles]

Rejigged that first chart and fixed some more data errors - it's now more focused on lender loans rather than loan characteristics:

you can see where you current loans are - in time
see where/when you'll get most defaults
still see the churn (though not as well)

Not sure if arrears fits - it will change all the time and perhaps isn't that meaningful?

9999

[myles]

I can't quite work this out, perhaps I've been looking at it for too long... It appears that the default rate for newer loans has significantly dropped since the start of this year i.e. I've not had any defaults from loans that started this year!

I've gone through and checked that the flagging of loans as 'Charged Off' is correct (it is based, on date of last payment).

Has the debt collection process 'scared' borrowers into paying or paying off loans, or is this something else? Or have I got this wrong?
10002

Blue: rate of loans that default (i.e. defaults/total loans per month as %) against loan start date
Dotted: number of loans purchased
Red: 9 months default free
Purple: arrears go back 6 months only (there are no major errors in the allocation of arrears)

So, it appears that since the start of this year, loan defaults have dropped on new loans - suggesting that changes to borrower selection or debt collection has made a difference?

Excellent if it has, but I just can't quite convince myself that I might not have this wrong.

The only thing that could have influenced this was that I tightened up on loan selection in the lead up to Christmas, but I don't believe that would explain it...

[myles]

I think I've figured it out...

Loans don't (typically) start defaulting until at least 2 months into the loan (borrowers can pay the first couple of instalments), with the arrears process then taking 180+ days (6 months), plus a month for the processing gets you to 9 months. However, it does appear that default rates may be on the decline as typically some defaults come through well before the 180 days...

So trying to get some meaningful information on defaults is going to have to be based on at least 9 month old data :( [unless you use arrears info]

The reason I'm interested in this is because it allows you to create stats like the table below for current loans - the missing detail in being able to determining this is the default rate, so it needs to be 'calculated' based on historic info (or something else), which can be problematic...



Loans
Principal
Interest
Fee
Default
Tax
Income
MRAR


1251
$121344.46
$26996.53
($4049.48)
($3002.13)
($2834.64)
$17110.29
14.10%





Grade
Loans
Principal
Interest
Fee
Default
Tax
Income
MRAR


A
10
$373.55
$47.46
($7.12)
($18.97)
($4.98)
$16.38
4.39%


B
143
$12631.25
$2071.81
($310.77)
($134.26)
($217.54)
$1409.24
11.16%


C
493
$46936.72
$9339.55
($1400.93)
($1238.18)
($980.65)
$5719.79
12.19%


D
436
$46098.19
$11152.73
($1672.91)
($602.01)
($1171.04)
$7706.77
16.72%


E
167
$15235.64
$4357.85
($653.68)
($1008.70)
($457.57)
$2237.89
14.69%


F
2
$69.11
$27.14
($4.07)
($0.00)
($2.85)
$20.22
29.25%



The above is calculated on my 'current' loans using 'default rates' from loans older than 10 months, going back a further 12 months to get a weighted average. Ignoring A's and F's due to low numbers (note I'm using a tax rate of 10.5%), it actually looks pretty close to what I'm getting (compared to XIRR calculation on total loans).

I've been looking around to see what others (academics) have done to try to determine default rates - some are using a 'derived' weighting on arrears so it looks at more recent data.

Has anyone else looked into this and come up with any good options?

Note: My B grade loans are weighted on the high side (i.e. mostly B3, B4, B5, so B grade is showing higher than what an average spread would be).

[leesal]

Numbers start to be a bit dodgy at those levels - pretty much across the board for those with significant detail (an obvious bump up in E). Partial PP looks like a waste of time and the values are too small to have much meaning.

9993

Note: This could be influenced by other criteria that I use to select loans e.g. loan/income ratio?

Nice observation. Going to really watch that. I've been keen to grab pp loans, due to the extra premiums available at the same grading (and few reports of envocations). Your data suggests a near doubling of risk at the B to D grades. Am also noticing that that 3 or my 4 defaults, and 3 of 4 60-90 days are pp loans.

[leesal]

You are correcty Myles about the 9 months give or take, I'm benchmarking my cohorts against HM's static loss data - H1 2018 is currently at 0% 3 months through - which is the same as all the other cohorts except 2016 H1 at a tiny 0.03%. Looks like the 7th month (approx 13 months through), is when defaults from a cohort start approaching a meaningful level as the 120+ days start converting to charge-offs.

10003

[leesal]

I think I've figured it out...

Loans don't (typically) start defaulting until at least 2 months into the loan (borrowers can pay the first couple of instalments), with the arrears process then taking 180+ days (6 months), plus a month for the processing gets you to 9 months. However, it does appear that default rates may be on the decline as typically some defaults come through well before the 180 days...

So trying to get some meaningful information on defaults is going to have to be based on at least 9 month old data :( [unless you use arrears info]

The reason I'm interested in this is because it allows you to create stats like the table below for current loans - the missing detail in being able to determining this is the default rate, so it needs to be 'calculated' based on historic info (or something else), which can be problematic...



Loans
Principal
Interest
Fee
Default
Tax
Income
MRAR


1251
$121344.46
$26996.53
($4049.48)
($3002.13)
($2834.64)
$17110.29
14.10%





Grade
Loans
Principal
Interest
Fee
Default
Tax
Income
MRAR


A
10
$373.55
$47.46
($7.12)
($18.97)
($4.98)
$16.38
4.39%


B
143
$12631.25
$2071.81
($310.77)
($134.26)
($217.54)
$1409.24
11.16%


C
493
$46936.72
$9339.55
($1400.93)
($1238.18)
($980.65)
$5719.79
12.19%


D
436
$46098.19
$11152.73
($1672.91)
($602.01)
($1171.04)
$7706.77
16.72%


E
167
$15235.64
$4357.85
($653.68)
($1008.70)
($457.57)
$2237.89
14.69%


F
2
$69.11
$27.14
($4.07)
($0.00)
($2.85)
$20.22
29.25%



The above is calculated on my 'current' loans using 'default rates' from loans older than 10 months, going back a further 12 months to get a weighted average. Ignoring A's and F's due to low numbers (note I'm using a tax rate of 10.5%), it actually looks pretty close to what I'm getting (compared to XIRR calculation on total loans).

I've been looking around to see what others (academics) have done to try to determine default rates - some are using a 'derived' weighting on arrears so it looks at more recent data.

Has anyone else looked into this and come up with any good options?

Note: My B grade loans are weighted on the high side (i.e. mostly B3, B4, B5, so B grade is showing higher than what an average spread would be).

I'm not sure about the value of estimating default rates to give estimated returns, always seemed to me to be somewhat manufactured. Instead I tend to run my actuals alongside benchmarks derived from HM data (Weighted Ave of HM assigned expected default rates ), and run comparisons on the monthly cohorts. Each line in the table has a separate sheet where forecasts are derived from plugged in data (the expected interest rate, and expected default and some others), and the running and projected defaults/RAR etc are returned. EG the first capture represents all loans, 2nd is only "D" grade.

10008

10009

[myles]

I'd rather get my average (not estimated) rates from my own data which is likely to be a better match than using Harmoney 'all in' averages?

[RMJH]

Massive amount of loans just uploaded. I have never seen so many. Loan listing stats don't seem to be updating though. Almost feels like a glitch!

[alundracloud]

Massive amount of loans just uploaded. I have never seen so many. Loan listing stats don't seem to be updating though. Almost feels like a glitch!

There were 28 available at one point- first time I've ever needed to scroll over to page 2:

10012

[joker]

Massive amount of loans just uploaded. I have never seen so many. Loan listing stats don't seem to be updating though. Almost feels like a glitch!
Yes updating was a problem this morning...I found (too late) that the platform failed to show that I was already invested in several loan. As a consequence, I have doubled and tripled up on some loans. Have emailed Harmoney for a fix/cancellation of the over-investment...not holding my breath. Be wary of this issue - I have encountered it previously.

[RMJH]

Yes updating was a problem this morning...I found (too late) that the platform failed to show that I was already invested in several loan. As a consequence, I have doubled and tripled up on some loans. Have emailed Harmoney for a fix/cancellation of the over-investment...not holding my breath. Be wary of this issue - I have encountered it previously.
Ha, yes, too good to be true! I had up to 10X on individual loans! Still made a big dent in the pile of uninvested funds though and Harmoney spotted the problem so not over-exposed on any individual loans.

[Vagabond47]

Bugger, had my first loan get charged off today. E2 from Dec 2017. Looks like 3 payments were made, then nothing. 97% of principal lost on that one, and one more that is getting rather close to the 180day mark too. Also an E2, from the very same day as the first.

[myles]

Finally got around to doing a time lapse chart of loans vs time ($100K invested in the first ~3 months):

http://i634.photobucket.com/albums/uu65/mylesau/Harmoney/timeage.gif

After the initial $100K investment, no further funds are added, just reinvestment of paid off loans and interest. It really highlights how few loans are likely to go full term. [The total period is around 18 months].

At about week 30 (7 months), the number of the original 'lump' of loans plummets.

[RMJH]

Thanks Myles, but the lines don't show for me...

[Vagabond47]

Thanks Myles, but the lines don't show for me...

Ditto, only a single frame, no timelapsyness happening.

[myles]

Is that working for you now? Forum appears to mangle gif videos as it resizes them and just stores a single frame? Have hosted offsite.

Hmm, looks like the forum renames the gif image to jpg, which would confuse some browsers, that's why it was working for me and I didn't notice (Chrome is good)...

[Vagabond47]

Is that working for you now? Forum appears to mangle gif videos as it resizes them and just stores a single frame? Have hosted offsite.

Hmm, looks like the forum renames the gif image to jpg, which would confuse some browsers, that's why it was working for me and I didn't notice (Chrome is good)...
All good now. (chrome/Android tablet)

[IntheRearWithTheGear]

All good now. (chrome/Android tablet)

Same looks good on firefox. Nice idea.

[Wsp]

More:

9986

Plot of 'loan payment' / 'income' ratio - in general a rise to the right, as expected - not at all clear cut though. Might need to include more info e.g. loan size, grade?

9987

Does not include groups with less than 10 to try to 'lift' the detail, but it needs to be interpreted - in general the 'more gaps' to the right suggests the longer the better (outliers hide the detail).

9988

Added two more to this one:

payment protect doesn't have the big jump that some thought it might (they are higher though)
re-writes stand out (for me at least)


Have you looked at differences in default rates between borrowers who make comments and those that don't?

[Investor]

Have you looked at differences in default rates between borrowers who make comments and those that don't?

None of this information is decision-useful or statistically significant given the sample size.

[Vagabond47]

Same looks good on firefox. Nice idea. Did you get the extra data i send through pm ?

I assume that is for myles? I didn't get or expect anything.

Anyway, next question.. how have I ended up with a negative funds available amount? I did invest in a few loans today, but I thought the system was supposed to stop you from investing money you don't have? -$38.09 available funds.

[Investor]

I assume that is for myles? I didn't get or expect anything.

Anyway, next question.. how have I ended up with a negative funds available amount? I did invest in a few loans today, but I thought the system was supposed to stop you from investing money you don't have? -$38.09 available funds.

It happens fairly often due to system errors on Harmoney's side.

They don't contact you about it or charge fees as it's their fault so just consider it a bonus.