Harmoney

[RMJH]

https://www.chrislee.co.nz/taking-stock exhibits negative sentiments too. But we hope Harmoney goes from strength to strength as a P2P and alternative funding source for the community Hardly impartial. They won't be getting a single cent of my money!

[BJ1]

I recall that Chris Lee brokered investments in questionable finance companies pre the 08 debacle. I think I'll keep my own counsel on what makes a satisfactory investment.

[bung5]

Anyone else has their rar missing from dashboard?

[humvee]

Anyone else has their rar missing from dashboard?

Yes. This has happened in the past too

[leesal]

Quite possibly the worst HM loan I've ever seen :scared:

10147

[BJ1]

So much for refinancings requiring a proven payment history. Question is, who has already subscribed 13% to the loan? No wonder the big boys' RAR is trending so poorly, when there is no weeding out of rubbish from entering their portfolio. Will be interesting to watch and see how long this hangs around before it is gulped up because it has sat for so long.

[alundracloud]

So much for refinancings requiring a proven payment history. Question is, who has already subscribed 13% to the loan? No wonder the big boys' RAR is trending so poorly, when there is no weeding out of rubbish from entering their portfolio. Will be interesting to watch and see how long this hangs around before it is gulped up because it has sat for so long.

Loans like this are the reason I keep auto-lend turned OFF! Does make you wonder about the quality of loan applications they reject (~75% of all applications) if this one can make the cut. And only a D5 too?!

[BJ1]

And just 26 minutes later it's gone and all the other loans on the board are down to a couple of notes left to go. It's OK to take a portfolio approach in terms of risk/return but some of these loans should fall into the irresponsible lending category - who carries the can if that is determined? Not Harmoney because it isn't the one doing the lending?

[beacon]

Quite possibly the worst HM loan I've ever seen :scared:

10147

5 defaults by a single 21 year-old living with parents, considered worthy enough to top-up a previous 5-year Harmoney loan by over 50% after having made just one monthly repayment on that previous loan - to refresh him/herself with a much needed holiday he/she had no cash to buy in the first place. Wow! Looks like a G (junk) grade...

Harmoney must know a lot we don't, to entertain this. They could still prevent some avoidable angst and chatter on loan quality, if they added a filter for number of defaults (like others by number of years in residence or job).

[RMJH]

Quite possibly the worst HM loan I've ever seen :scared:

10147
FFS, and my filters didn't catch it! D5?! Maybe there were extenuating circumstances or maybe not! High time we had a filter for defaults.

[beacon]

There are 26 registered banks in NZ, but ANZ, ASB, BNZ and Westpac between them account for 87% of bank assets. In March 2018 the banking system’s assets were worth $527 billion, equivalent to 186% of GDP.
https://www.interest.co.nz/banking/96812/rbnz-act-review-consultation-paper-details-local-financial-system-numbers-highlighting

So, if Harmoney don't drop the ball on loan quality, reporting and bookkeeping standards, customer communication and empowerment, they can go a very long way indeed. :)

[alundracloud]

Call me cynical, but does anyone seriously believe someone that earns $24k a month after tax needs to borrow $16k for a new car?

10149

[CR_111]

Call me cynical, but does anyone seriously believe someone that earns $24k a month after tax needs to borrow $16k for a new car?

10149

I was just about to post this one. That is some serious money in Gisborne.

[CageyB]

I was also going to post that. Yikes.

[beacon]

Harmoney must know a lot we don't, to entertain this. They could still prevent some avoidable angst and chatter on loan quality, if they added a filter for number of defaults (like others by number of years in residence or job).

If they do know a lot that we other investors don't, then they have a conflict of interest if they invest on their own platform with insider knowledge...

[joker]

Call me cynical, but does anyone seriously believe someone that earns $24k a month after tax needs to borrow $16k for a new car?

10149More like monthly income of $2,420.43 and a Harmoney keying error (banging the 4 twice) making it $24,420.43

[RMJH]

More like monthly income of $2,420.43 and a Harmoney keying error (banging the 4 twice) making it $24,420.43
Bit of a worry that the system didn't catch it later though. Makes me wonder what they actually do to check application details...

[BJ1]

I questioned a similar loan a fortnight ago and to their credit I got a response to say they do check the bank statements and in that case had gone back after my query and double checked that the data was correct. However, on the previous occasion I queried the data it turned out to be wrong and the loan was withdrawn, corrected and resubmitted.

[leesal]

Difficult to believe the data would be correct - as that would they're earning $450,000pa before tax. Excepting for lotto winners, not aware of anybody in gisborne earning that money - let alone a 20-29yo with an E4 rating.

Will also add, have been on HM 15 months today and finally crossed the 50k mark. Total P2p holdings just under 85k.

10155

[beacon]

finally crossed the 50k mark. Total P2p holdings just under 85k.

Great going, focus on 3 year loans like BJ1 paying off :t_up:

[alundracloud]

Really nice numbers leesal!

[myles]

Will also add, have been on HM 15 months today and finally crossed the 50k mark. Total P2p holdings just under 85k.
I see a rise in defaults in your future - you're at about that stage I think - of course you may have it all worked out and miss out :t_up:

I'm at about +1% RAR but at about a 40 fold default rate :eek2: - that's with double the investment at just over 600 days.

Did you, are you, winning your wager?

[leesal]

@ beacon / alundracloud - Thanks. Will do well to have defaults like BJ1 @ 40k interest, don't think will match his 36 month loans either!

@ myles - Lost the wager, rather anticlimatic -the winner fluked it on10 E grade loans, a couple of which looked terrible!

Am fully expecting defaults to come - am hoping they'll stay below 3% of loans (or approx 50 on current #s). Don't think will match your RAR. Will be good if can continue flirting with 15% (Will certainly screenshot cross that mark).

Pity about the 33% WHT. Are there any useful tips on how to minimise this? Don't have an investment property to offset tax credits.

[Cool Bear]

@ beacon / alundracloud - Thanks. Will do well to have defaults like BJ1 @ 40k interest, don't think will match his 36 month loans either!

@ myles - Lost the wager, rather anticlimatic -the winner fluked it on10 E grade loans, a couple of which looked terrible!

Am fully expecting defaults to come - am hoping they'll stay below 3% of loans (or approx 50 on current #s). Don't think will match your RAR. Will be good if can continue flirting with 15% (Will certainly screenshot cross that mark).

Pity about the 33% WHT. Are there any useful tips on how to minimise this? Don't have an investment property to offset tax credits.
Hi Leesal
if you are effectively paying 33% on ALL your HM interest, then it is probably wise to do it as a limited company and pay 28%. Hardly any additional cost involved if you do it yourself. A bit of record keeping, simple accounts and tax forms (online) and $40+ to the Companies Office each year. DIY setting it up with the Companies Office will cost less than $200.

[leesal]

Hi Leesal
if you are effectively paying 33% on ALL your HM interest, then it is probably wise to do it as a limited company and pay 28%. Hardly any additional cost involved if you do it yourself. A bit of record keeping, simple accounts and tax forms (online) and $40+ to the Companies Office each year. DIY setting it up with the Companies Office will cost less than $200.

TY Cool Bear. Was meant to go through a trust with part of the income channeling to my partner on a lower tax bracket... But isn't panning out like that. And we don't need the cash now, so reinvesting it all.

Seems to make sense to setup a company. Does it make any difference if its a LTC?

[Cool Bear]

TY Cool Bear. Was meant to go through a trust with part of the income channeling to my partner on a lower tax bracket... But isn't panning out like that. And we don't need the cash now, so reinvesting it all.

Seems to make sense to setup a company. Does it make any difference if its a LTC?
By LTC, I suppose you meant a Look Through Company? Then makes no difference in setting up one as the income and expenditure becomes yours and you will be taxed at 33%. Set up a "normal" limited company and leave the profits in there to be taxed at 28%. Later, if your tax rates drop, I presume you can then take the profits out as dividends to be taxed at the lower tax rates. But seek advise first if you are talking about significant amounts

[leesal]

By LTC, I suppose you meant a Look Through Company? Then makes no difference in setting up one as the income and expenditure becomes yours and you will be taxed at 33%. Set up a "normal" limited company and leave the profits in there to be taxed at 28%. Later, if your tax rates drop, I presume you can then take the profits out as dividends to be taxed at the lower tax rates. But seek advise first if you are talking about significant amounts

Thanks top advice :) Will look into setting up as a company.

Have noticed recently that the afternoon loans get wolfed down like an double chocolate magnum on a desert island. Saw a B5 a moment ago, barely read the detail and was gone before had confirmed the order. Followed by a C3 and B3 which got an order on instantly and disappeared a few seconds later.

Similar story for about a week around this time.

[myles]

Have noticed recently that the afternoon loans get wolfed down like an double chocolate magnum on a desert island. Saw a B5 a moment ago, barely read the detail and was gone before had confirmed the order. Followed by a C3 and B3 which got an order on instantly and disappeared a few seconds later.

Similar story for about a week around this time.
Not sure if it's the same for everyone, but I'm being flooded with cash coming back at the moment - I suspect it's pre-Christmas re-write top ups - which means there is a lot more available cash around to be invested - which results in loans disappearing quickly...my theory anyway...

[RMJH]

Not sure if it's the same for everyone, but I'm being flooded with cash coming back at the moment - I suspect it's pre-Christmas re-write top ups - which means there is a lot more available cash around to be invested - which results in loans disappearing quickly...my theory anyway...
Funnily enough I have just put some more cash in for the first time in 18 months as I managed finally to get the balance to zero. I check a few times a day so maybe I just got lucky.

[myles]

Yep, no shortage of loans at the moment, but some are going quickly.

[BJ1]

Leesal, think about who owns the money you have in Harmoney. If passing income through a trust to your partner would enable you to reduce the tax rate then the income attributed would no longer be yours or your trusts but your partner's. If you are willing to make "your" money relationship money then perhaps ask why the Harmoney money shouldn't be your partner's share of the whole of your relationship money. That might mean all Harmony income can be attributed to your partner.

[Vagabond47]

Yep, no shortage of loans at the moment, but some are going quickly.

The xmas consumer borrowing rush has begun. Has anyone done analysis of the default rate by origination date? ie, are these loans in the pre/post xmas rush (mid Nov - end Jan?) more or less likely to default? I would suspect they have a higher default rate than loans originated through the rest of the year, particularly the lower graded loans.

Pure speculation on my part, but would be good to know.

[permutation]

The xmas consumer borrowing rush has begun. Has anyone done analysis of the default rate by origination date? ie, are these loans in the pre/post xmas rush (mid Nov - end Jan?) more or less likely to default? I would suspect they have a higher default rate than loans originated through the rest of the year, particularly the lower graded loans.

Pure speculation on my part, but would be good to know.

Been in 44 months, starting March 2015. Total A-D Grade Loans Taken 1880 and E-F grades 105.

Have enclosed Charge-offs from earliest date issue order. Put the loans in 4 Groups A&B,C,D,E&F. Have marked Charge-offs issued near the Holiday period.



10159

[myles]

Has anyone done analysis of the default rate by origination date? ie, are these loans in the pre/post xmas rush (mid Nov - end Jan?) more or less likely to default?
If you go back a few pages you'll find a graph of exactly that.

[leesal]

Leesal, think about who owns the money you have in Harmoney. If passing income through a trust to your partner would enable you to reduce the tax rate then the income attributed would no longer be yours or your trusts but your partner's. If you are willing to make "your" money relationship money then perhaps ask why the Harmoney money shouldn't be your partner's share of the whole of your relationship money. That might mean all Harmony income can be attributed to your partner.

Thanks. One of those age old question, tax efficiency or maximising trust assets. Nice advice and given me a lot to think about. Might consider a ltd liability company with dividends through to my partner.

[leesal]

If you go back a few pages you'll find a graph of exactly that.

This is just observation, when looking at the data between different years previously. I observed that arrears/defaults in xmas 2017 (nov & dec17) against other months of the year showed a deterioration during the xmas months. However in prior years there wasn't any difference.

Can confirm when get back home tomorrow, and relook at the data.

[BJ1]

Thanks. One of those age old question, tax efficiency or maximising trust assets. Nice advice and given me a lot to think about. Might consider a ltd liability company with dividends through to my partner.
Company dividends usually go to shareholders pro rata. In your circumstances anything else will attract the attention of IRD as a tax arrangement and you'll be in strife. I suggest you see a tax specialist, but in my experience there is no simple fix.

[myles]

there is no simple fix.
Create a Harmoney account in your partners name... Lower tax rate means higher investment return, which results in a higher compounding effect etc. Assuming that's an option?

[leesal]

Good suggestion, but not sure an account in her name would be an option. Need to balance preservation trust capital with tax efficiency. Thanks for the suggestion, would otherwise be a good option.

[CageyB]

Create a Harmoney account in your partners name... Lower tax rate means higher investment return, which results in a higher compounding effect etc. Assuming that's an option?

I've considered this in the past, but are there any other IRD considerations? Say we had a bank account where we are both joint holders. Could my partner open a Harmoney account in their name, with deposits paid from that joint account, and be considered a separate entity in regards to tax bracket?

[777]

I've considered this in the past, but are there any other IRD considerations? Say we had a bank account where we are both joint holders. Could my partner open a Harmoney account in their name, with deposits paid from that joint account, and be considered a separate entity in regards to tax bracket?

Well if you can't then I am in the old proverbial. My current account is a joint account as all our utilities etc. get direct debited from it. Joint simply to cover my demise at some point then everything carries on without any restrictions. So I operate it as my account and all investing done in my name is taxed at my rate except for any income received from the bank which is shared. ie savings account and term deposits from time to time.

[BJ1]

Cagey and 777 - I think you need to get some advice. If the wealth is jointly owned then IRD expects income from it to be shared equally. Anything else IRD considers to be a tax arrangement.

[777]

Cagey and 777 - I think you need to get some advice. If the wealth is jointly owned then IRD expects income from it to be shared equally. Anything else IRD considers to be a tax arrangement.

Ultimately that would reduce my tax.

To take that further then all married people have joint wealth except for an inheritance if kept ring fenced.

[Stylerz]

Hi, I'm sure my question has been discussed before, but having no luck trawling through the pages trying to find it.

Is it possible to offset Harmoney earnings against rental property mortgage interest to reduce tax liability. And/or take a small mortgage to invest in Harmoney and offset the interest paid against the earnings.

Anybody able to point me in the right direction?

Thanks

[BJ1]

777 - note we are talking wealth, not income from personal effort. Essentially yes if they meet the definition of being in a relationship.

Stylerz - pay for advice and don't rely on any on this forum (including my comments). Generally your taxable income and expenses can be offset but there are exceptions, but borrowing money specifically to invest in an income producing asset does create a deduction.

[myles]

Interesting information linked in article: Strong annual growth in peer to peer lending (https://www.interest.co.nz/personal-finance/97040/strong-annual-growth-peer-peer-lending-value-outstanding-loans-reaches-489)

The article is the usual poor standard from that source...the inability to read basic numbers often astounds me...

The elephant that they missed is the change in the rate of loan defaults! Will leave it for those interested to delve into the detail, but it is clear that Harmoney is dominating the P2P arena by an enormous margin...

This is the source/good information: FMA: Peer-to-peer lending and crowdfunding: sector snapshot (https://public.tableau.com/profile/fmaadmin#!/vizhome/Reg_returns_final_version_0/Story1)
(terrible interface...)

[RMJH]

Thanks Myles. I didn't realise Southern Cross did P2P. Looks like significant growth in the number of higher value investors.

[Bjauck]

There was big increase in value of lending in the year. I guess much of the new loan book has not yet had time to go into default.

Harmoney is the biggest but is it true peer-to-peer when much of the lending comes from banks and big companies?

[johna]

Have been getting a lot errors when I try to confirm loans. Tells me it's not my fault and retry in a few minutes. Mostly it seems to fail for ages, although this morning the retry worked ok. Is anyone else having this problem?

[alundracloud]

Have been getting a lot errors when I try to confirm loans. Tells me it's not my fault and retry in a few minutes. Mostly it seems to fail for ages, although this morning the retry worked ok. Is anyone else having this problem?

I've invested in a couple of loans this morning, and didn't have an issue with either of them.

[RMJH]

Have been getting a lot errors when I try to confirm loans. Tells me it's not my fault and retry in a few minutes. Mostly it seems to fail for ages, although this morning the retry worked ok. Is anyone else having this problem?
I get this an awful lot and always have. I think maybe it's to do with lots of users trying to buy at the same time. I just keep retrying without waiting and it usually comes right in 2 or 3 goes.

[alundracloud]

Platform RAR at 9.66%, the lowest I've seen it.. Any guesses as to where it might settle?

10191

[Vagabond47]

10203

Good to see the data is throughly vetted as usual. But still almost fully funded already.

[alundracloud]

$2,000 in interest received reached today!! Really happy with the returns so far, long may it continue.... :)

Date of first investment = 5 January 2018
Total Loans invested in = 795
Average amount invested per loan = $33.18
Average age of loan in portfolio (current status) = 167 days
Average weighted interest (current status) = 21.23%

RAR (as at 8 Dec) = 15.13%
XIRR (as at 20 Dec) = 12.06% (writing off any loans in arrears for 60+ days)

Loan Book:
A = 14 Loans (15 Notes)
B = 180 Loans (243 Notes)
C = 271 Loans (357 Notes)
D = 262 Loans (352 Notes)
E = 62 Loans (82 Notes)
F = 6 Loans (6 Notes)

What are some of the things others track/measure on their portfolios?
Anyone else out there game to post their results, it's been a while!!
Have many changed their investment strategy since Myles' report?

10208

10209

10210

[RMJH]

Your RAR will probably drop a little as it matures. I seem to be steady at around 13% with a mix of A to D's based on filters but I seldom read the stories as I rely on diversification mostly. I have been in more or less from the start of Harmoney.

[RMJH]

Your RAR will probably drop a little as it matures. I seem to be steady at around 13% with a mix of A to D's based on filters but I seldom read the stories as I rely on diversification mostly. I have been in more or less from the start of Harmoney. My portfolio would be a little lower risk than yours.

[myles]

Really happy with the returns so far, long may it continue....

You're doing well alundracloud - watch for an increase in defaults in the next few months, nothing you can do about it, but around the 12 - 16 months in, is the time that defaults *typically* start to bite before they settle. If you look back to the many RAR graphs posted previously, you'll see the *typical* wave pattern where it drops off - *typically* by 1 to 2%.

My interest is now at $37,302.56 after 638 days from starting with $100,000 (give or take a few months to get the money in). But that is with 56 defaults (2.28%).

I've started tracking a few additional bits of data to keep track of my investment - overall summary over the last couple of months:

10211

Green line (left axis value) shows the 'cash in' value of my investment (i.e. after fees, defaults, tax).
Orange line (right axis value) shows the 'chunky' Harmoney RAR calculation.
Blue line (right axis value) is my XIRR calculation for entire period - fairly stable for me now.

My favourite, and simple graph is this one (not so simple to calculate):

10212
which shows my current loans calculated rate of annual return (after fees, defaults, tax). Note that this is for my investment method/style and won't be the same for someone else. (I have a couple of A's and some crazy returning F's, greater than 26%, but I don't show those since there are too few to be meaningful.)

I take D's and low E's when I can, but I'm up to $7,385 available cash at the moment being extra picky on loans this time of year and finding the usual Christmas lull of good loans a problem :(

I tweaked a few things after WE​ collected that data-set, but overall haven't made too many major changes.

At this time of year arrears will likely sky rocket (not seen it yet), but they should come down again once people come back from holiday and start earning $ and normality sets in...

[Bjauck]

$2,000 in interest received reached today!! Really happy with the returns so far, long may it continue.... :)

Date of first investment = 5 January 2018
Total Loans invested in = 795
Average amount invested per loan = $33.18
Average age of loan in portfolio (current status) = 167 days
Average weighted interest (current status) = 21.23%

RAR (as at 8 Dec) = 15.13%
XIRR (as at 20 Dec) = 12.06% (writing off any loans in arrears for 60+ days)

Loan Book:

Are you a retail investor and are you able to deduct charge-offs for tax purposes? Once the charge offs kick in (and I think the average charge-off rate is 22% of gross interest) this is an important factor as the incidence of tax on your Harmoney-supplied RAR may well be greater than 33%. There has been no guidance for retail P2P investors. So the “in business” test is relevant.

[alundracloud]

Are you a retail investor and are you able to deduct charge-offs for tax purposes? Once the charge offs kick in (and I think the average charge-off rate is 22% of gross interest) this is an important factor as the incidence of tax on your Harmoney-supplied RAR may well be greater than 33%. There has been no guidance for retail P2P investors. So the “in business” test is relevant.

Hi Bjauck,
Yes I'm a 'cash-basis' retail investor, and will deduct charge-offs and fees paid as a tax deductible expense.

I invest through an NZ Limited Liability Company.

[myles]

It might pay to check your filters. I'm not 100% sure, but I suspect a couple of check boxes have dropped off my filter. On occasion I have seen values with [Object] in them instead of the correct value - likely cause is a change in the background. Nothing sinister for the tin foil hat brigade, just some tinkering in the background I suspect. Probably a good idea to review them once in a while anyways...

[joker]

Welcome back from Harmoney and we hope you have a prosperous 2019. Meanwhile, here's another $140 of loan charge-offs for you!...Just what I needed!!!

[Soolaimon]

Welcome back from Harmoney and we hope you have a prosperous 2019. Meanwhile, here's another $140 of loan charge-offs for you!...Just what I needed!!!

Same here Joker, this time it is an A loan, first A that I have had charged off and I have now had 16 charge offs out of around 1700 loans.

[permutation]

Coming up to my 4th Anniversary in March.
1985 Loans Total; 101 Loans in E&F, Charge offs running at 17 Loans per 100 (2 Loans Left). 1884 Loans in A_D, Charge-offs running at 2 Loans per 100.
$$Charged off vs Gross Interest received to Date= 14.0850%

[leesal]

Happy new year everybody! My investments have started in relatively good shape, albeit $100 sitting at 120-180 days and a further $125 at 90-120 which looks set to quash the RAR. Went overseas for 40 days, and my portfolio holdings fell back by 5% ($4000), but fortunately have been able to recover that in the past 10 days.

Added a chart that are interesting for me, may be for others. Charts net interest earned against the outstanding principal value of arrears from HM. For reference also included my RAR stats and outstanding principal from all P2P

10256

10257

[myles]

Are we at a point in history that could be labelled 'The Debt Crisis'? Or is it another 20 years off?

This is just a topic for discussion if anyone is interested. I'm at a loss as to where this is all heading, I don't think we've seen anything similar before. So many of the younger generation are now so heavily exposed to debt that I can't see how they will ever be able to rise above it. They seem to have the attitude of live now and don't worry about the future.

Looking at the loans that go through Harmoney, it appears to me that this is spreading up the generations, with more and more 'older' people going further into debt rather than the historical progression of getting out of debt as we age. If house values fall (as it appears they are beginning to - certainly in some areas of Aus and NZ) it will significantly add to the problem.

The Australian Govt. appear to be very concerned as it's more prevalent over there, but I don't think they know what to do about it. The NZ Govt. recently brought in restrictions on excessively high rates on personal loans - is that enough?

Does anyone have a crystal ball view of what the future might hold?

This may not be the right area to post this, but I think those investing in P2P have a different perspective than others may have and that is the perspective I'm more interested in.

[Bjauck]

No crystal ball but the property market has always had cycles of boom, consolidation and correction. NZ home ownership rates are falling with first home owners having to wait longer as they need to save longer for deposits and requiring bigger debt (house prices have increased more than both inflation and incomes) to buy into housing. The goal of becoming mortgage free by age 60 is becoming more unattainable consequently older people are more indebted compared with previous generations.

I think that a big difference between NZ and Australia is that Australian households have more of their wealth (both absolutely and in percent terms) in financial and pension fund assets. NZers rely more on real estate (both owner-occupied and investment real estate.)

Wealth (which is mostly real estate wealth in NZ) is also becoming less evenly distributed. 8% of NZ households have 40% of NZs mortgage debt. Add to this the fact that the IMF has said NZ household debt is too high, then there is bit of an UXB (unexploded bomb) waiting for a vibration to be felt.

It is these heavily indebted households that would be particularly susceptible to any economic downturn or whenever interest rates rise from historic lows. However the ripples would be felt throughout the residential property market and have an effect on the retirement assets for many NZ households.

https://www.stuff.co.nz/business/money/104323467/reserve-bank-says-8-per-cent-of-households-owe-40-per-cent-of-all-mortgage-debt

https://www.newsroom.co.nz/2018/04/17/105318/household-debt-too-high-says-imf

[myles]

I think that a big difference between NZ and Australia is that Australian households have more of their wealth (both absolutely and in percent terms) in financial and pension fund assets. NZers rely more on real estate (both owner-occupied and investment real estate.)


Having come over from Aus, I can attest that the compulsory Australian pension (superannuation) is one of the better choices made. Being able to access KiwiSaver early, I think, will always be problematic - time will tell.

A great read if anyone is interested:

Household Debt And Financial Stability - IMF (https://www.imf.org/~/media/Files/Publications/GFSR/2017/October/chapter-2/Documents/C2.ashx)

Some great data for comparison:

IMF DataMapper - US, UK, AU, NZ Debt/GDP (https://www.imf.org/external/datamapper/HH_LS@GDD/GBR/USA/AUS/NZL)

Another source of good comparative info:

Trading Economics (https://tradingeconomics.com/new-zealand/households-debt-to-gdp)

Perhaps this is to 'heavy' of a conversation for this thread.

[leesal]

Having come over from Aus, I can attest that the compulsory Australian pension (superannuation) is one of the better choices made. Being able to access KiwiSaver early, I think, will always be problematic - time will tell.

A great read if anyone is interested:

Household Debt And Financial Stability - IMF (https://www.imf.org/~/media/Files/Publications/GFSR/2017/October/chapter-2/Documents/C2.ashx)

Some great data for comparison:

IMF DataMapper - US, UK, AU, NZ Debt/GDP (https://www.imf.org/external/datamapper/HH_LS@GDD/GBR/USA/AUS/NZL)

Another source of good comparative info:

Trading Economics (https://tradingeconomics.com/new-zealand/households-debt-to-gdp)

Perhaps this is to 'heavy' of a conversation for this thread.

Will share my thoughts, as had previously done some research on this for a presentation I did late last year.

P2P falls under consumer debt. The RBNZ statistics provides a breakdown between M1 (Consumer loans) and M2 (Housing loans) in its Household Balance sheet (see attached). It reflects that M2 has nearly quintupled over the past 20 years, while M1 has only doubled. From the peak of the GFC (approx Sep18), M1 has only increased by 20% whereas housing loans are 60% up. Infact housing loan lending INCREASED during the GFC!!!

In the Key household financial stats (interest on consumer loans (D2) and housing loans (D1)), the observable trend contradicts the above. And both consumer and housing loans follow the same trajectory since the GFC peak. The impact of successive interest rate reductions.

Interest rate increases will cause cataclysmic chaos for those holding housing loans, the focus of IMF risk. Consumer debt defaults will be impacted, particularly lender holding distressed housing assets... However history demonstrates that mortgage defaults during the GFC was higher that of credit card debt. Which could indicate that lenders valued their unsecured debt/availability over their distressed assets?

As investors believe that the most we can do is position ourselves given the current economic environment. I consider P2P investment as a defensive option, and believe returns will outstrip real estate investment and sharemarket loans over the medium term irrespective of when and if a recession occurs.

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[Saamee]

Will share my thoughts, as had previously done some research on this for a presentation I did late last year.

P2P falls under consumer debt. The RBNZ statistics provides a breakdown between M1 (Consumer loans) and M2 (Housing loans) in its Household Balance sheet (see attached). It reflects that M2 has nearly quintupled over the past 20 years, while M1 has only doubled. From the peak of the GFC (approx Sep18), M1 has only increased by 20% whereas housing loans are 60% up. Infact housing loan lending INCREASED during the GFC!!!

In the Key household financial stats (interest on consumer loans (D2) and housing loans (D1)), the observable trend contradicts the above. And both consumer and housing loans follow the same trajectory since the GFC peak. The impact of successive interest rate reductions.

Interest rate increases will cause cataclysmic chaos for those holding housing loans, the focus of IMF risk. Consumer debt defaults will be impacted, particularly lender holding distressed housing assets... However history demonstrates that mortgage defaults during the GFC was higher that of credit card debt. Which could indicate that lenders valued their unsecured debt/availability over their distressed assets?

As investors believe that the most we can do is position ourselves given the current economic environment. I consider P2P investment as a defensive option, and believe returns will outstrip real estate investment and sharemarket loans over the medium term irrespective of when and if a recession occurs.

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10264

I asked this question over on the LC forum over 2 weeks ago and got no replies!

As it is in the same notion as this thread I'll ask again here, now :)

So what do you think is the largest 'Threat' to our investments in P2P within NZ?

I've just been mulling this over, especially with another World Economic crisis breathing down everyone's necks!

Well my take and penny worth is this > Personal Bankruptcies > Personal Borrowers that go 'Belly Up' ( Mortgage, Car Loan, P2P Loan etc )

Where P2P Borrowers decide the pain is not worth the gain.... So allow themselves to be taken through the Bankruptcy process.

[myles]

I consider P2P investment as a defensive option, and believe returns will outstrip real estate investment and sharemarket loans over the medium term irrespective of when and if a recession occurs.

Agree. The housing (real estate) situation is a major concern for NZ.

My question was more focused on the increasing amount of debt, rather than what happens if... I don't believe it can continue to grow without a significant shift at some stage. The 'what happens if', may be the trigger. The whole economic meaning and value of money seems to be changing. Will you be considered wealthy in the future if you have less debt than someone else???

Somehow the money of the few needs to be disbursed back to the many?

Where is that Robin Hood character when we really need him?

[myles]

So what do you think is the largest 'Threat' to our investments in P2P within NZ?

The first document I linked to has some detail.

I'll put my money on Interest Rates as the biggest 'Threat' to P2P investments.

[IntheRearWithTheGear]

The first document I linked to has some detail.

I'll put my money on Interest Rates as the biggest 'Threat' to P2P investments.

Government Loan shark legislation

Other competitors – ie moola, gem etc. 'Threat' to P2P investments.


Interesting read is the "Consumer-Credit-Behavioural-Economics-Case-Study-2012-Final.pdf" google it. As you read - tell me harmoney is not trying the same psychology tricks with their homepage landing page.

[myles]

Interesting read is the "Consumer-Credit-Behavioural-Economics-Case-Study-2012-Final.pdf"

Great read. Outlines the problems and some possible directions to take to correct (though all trials/considerations seem to fail!). Education at school level may be of value, but how do you compete with parents setting bad behavioural examples?

It doesn't make any reference to where things are heading though :(

Link to document here (http://srgexpert.com/wp-content/uploads/2017/11/Consumer-Credit-Behavioural-Economics-Case-Study-2012-Final.pdf)

[myles]

I'll put my money on Interest Rates as the biggest 'Threat' to P2P investments.

Just to clarify this with two basic examples:



If interest rates rise, mortgagees come under stress resulting in stress on P2P repayments etc.
If interest rates fall, P2P loan churn will increase as rates will need to fall to match or number of borrowers will decline. [all three are bad for P2P investors]


Interest Rates change will no doubt affect other aspects as well.

The drivers for Interest Rate change are the real threats - what they are/will be - who knows :confused:

[Paddles]

I invest in B-E with 29% D rated and 18% E rated. Looking at the chart attached of loans issued/arrears and charge offs it would appear E rated loans have a better risk reward than D rated.

[myles]

it would appear E rated loans have a better risk reward than D rated.

?

Charge off rate for D: 11369743 / 154763275 * 100 = 7.35% (Interest rate ~ 25.55%)
Charge off rate for E: 6586033 / 57642825 * 100 = 11.43% (Interest rate ~ 27.84%)

This is my current return (but it will be different for everyone - minimum tax rate):

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[Paddles]

Thanks Myles.

I'm thinking that if I am selective with lending criteria for E rated loans I can mitigate the charge offs to some extent?
i.e. Home owners, with min 3+ years current employer and payment to income >10%?

[myles]

I'm thinking that if I am selective with lending criteria for E rated loans I can mitigate the charge offs to some extent?

If you haven't seen it, grab the summary.pdf (https://www.sharetrader.co.nz/showthread.php?10065-Harmoney&p=733745&viewfull=1#post733745) document from the linked post.

A group of us put it together with shared data - it might help you make some selective loan choices.

[Paddles]

If you haven't seen it, grab the summary.pdf (https://www.sharetrader.co.nz/showthread.php?10065-Harmoney&p=733745&viewfull=1#post733745) document from the linked post.

A group of us put it together with shared data - it might help you make some selective loan choices.

That's awesome, thank you!

[CageyB]

Thanks Myles.

I'm thinking that if I am selective with lending criteria for E rated loans I can mitigate the charge offs to some extent?
i.e. Home owners, with min 3+ years current employer and payment to income >10%?

In my (admittedly anecdotal and not data-driven) experience, just avoiding E's for buying cars (and especially boats) will eliminate a disproportionately large number of charge-offs. For what it's worth I'm at 14% RAR and I've been in for almost three years now. I don't touch F's, however.

[Art]

I have not been following this thread for a while so apologies if this query has recently been discussed.

Is there anyone here who predominately relies on auto-invest to make their investments for them? If so, what percentage of your account do you always need to leave uninvested so you trigger the auto-invest.

I have always had auto invest turned on, but it is rare that I have an auto-investment made even though the criteria loaded is not restrictive - any B,C or D loan. No other restrictions. I usually manage to keep my uninvested funds under $1k out of $70k, but it is time consuming. Wondering whether it would be worth earning no income on a small amount if it would mean a lot of the work could be done automatically.

Interested to hear your thoughts.

[alistar_mid]

I have not been following this thread for a while so apologies if this query has recently been discussed.

Is there anyone here who predominately relies on auto-invest to make their investments for them? If so, what percentage of your account do you always need to leave uninvested so you trigger the auto-invest.

I have always had auto invest turned on, but it is rare that I have an auto-investment made even though the criteria loaded is not restrictive - any B,C or D loan. No other restrictions. I usually manage to keep my uninvested funds under $1k out of $70k, but it is time consuming. Wondering whether it would be worth earning no income on a small amount if it would mean a lot of the work could be done automatically.

Interested to hear your thoughts.

I've been in for about 3 years and just with varying amounts, just deposited another $5k about 2 weeks ago and auto lend has been distributing it at about $800 a week. Before that I would just manually do the interest and re-writes, balance was always around $1k, seemed like then auto lend was doing jack shiet.

[RMJH]

I have not been following this thread for a while so apologies if this query has recently been discussed.

Is there anyone here who predominately relies on auto-invest to make their investments for them? If so, what percentage of your account do you always need to leave uninvested so you trigger the auto-invest.

I have always had auto invest turned on, but it is rare that I have an auto-investment made even though the criteria loaded is not restrictive - any B,C or D loan. No other restrictions. I usually manage to keep my uninvested funds under $1k out of $70k, but it is time consuming. Wondering whether it would be worth earning no income on a small amount if it would mean a lot of the work could be done automatically.

Interested to hear your thoughts.
I just went away for a long break (6 weeks) with auto invest on and came back to about 8% of my portfolio uninvested. I think if you relied solely on auto invest your cash would grow and grow.

[humvee]

I just went away for a long break (6 weeks) with auto invest on and came back to about 8% of my portfolio uninvested. I think if you relied solely on auto invest your cash would grow and grow.

Did you get many / any loans during that time? With 2-4% uninvested I have received pretty much no loans via autoinvest in the last 6+ months

[Art]

Thanks for your replies. Looks like I can't rely on auto-invest to do the donkey work for me then - pity because it would make the system a whole lot more user friendly.

[black knat]

I've become pretty disillusioned with Harmoney over the last few months after a number of years on the platform. I have investments in D,E and F catagories and a RAR of 13.7 odd but have been winding down due to the lack on retail loans listed.

[RMJH]

Did you get many / any loans during that time? With 2-4% uninvested I have received pretty much no loans via autoinvest in the last 6+ months
I did get some but uninvested cash doubled or tripled over that time. P2P has such potential if only the environment was right for them to flourish.

[myles]

have been winding down due to the lack on retail loans listed.

It has been tough this Christmas period (3 - 4 months) to keep $'s in. I've slipped out to a little over $14,000 in available funds from a total principal of around $130,000. Will consider putting $'s elsewhere next Christmas as that's a fair amount not to be earning something (tough to find something that works for short term though, other than a bank with next to no return anyway.).

In less then 2 years I've received over $40,000 in interest (on $100K) - very few other investments out there with that type of return, so I'm more than happy. Just hope some advertising kicks off soon and loan numbers increase again.

[leesal]

You could try investing on Squirrel. There is a secondary market (NB - haven't used SMs secondary market)

[leesal]

Have been away approx 2 months, and slipped around 10k (20% of portfolio).

Over the last week have seen very few loans, and most of those I wouldn't touch.

However looking at the platform stats, there were 353 loans on the week of the 20th and 358 on 27th. Which suggests HM is booming! (The 2018 average was 250 loans per week).

Perhaps HM have adjusted their retail vs institutional allocations in the institutions favor? But the "Retail vs Instutional Funding Mix" chart has not been updated since November....

[Bjauck]

....

Perhaps HM have adjusted their retail vs institutional allocations in the institutions favor? But the "Retail vs Instutional Funding Mix" chart has not been updated since November.... Of course Harmoney is overwhelming geared to pleasing its institutional big investors as that is where it gets most of the funds. It is peer-to-peer in structural name only and if you count a big business Lender as the peer of retail borrowers.

[leesal]

It has been tough this Christmas period (3 - 4 months) to keep $'s in. I've slipped out to a little over $14,000 in available funds from a total principal of around $130,000. Will consider putting $'s elsewhere next Christmas as that's a fair amount not to be earning something (tough to find something that works for short term though, other than a bank with next to no return anyway.).

In less then 2 years I've received over $40,000 in interest (on $100K) - very few other investments out there with that type of return, so I'm more than happy. Just hope some advertising kicks off soon and loan numbers increase again.

Nice results. $115k still a good amount invested.

[leesal]

Of course Harmoney is overwhelming geared to pleasing its institutional big investors as that is where it gets most of the funds. It is peer-to-peer in structural name only and if you count a big business Lender as the peer of retail borrowers.

To be fair HM could be adjusting to lower retail investing over the summer months. But would expect loans to come online in Feb instead of the sweet FA.

Have gone back to Squirrel Money lending to use up some excess funds, while the outlook remains shoddy.

[BJ1]

Anyone else been having problems trying to sign in the past 24 hours?

[leesal]

Anyone else been having problems trying to sign in the past 24 hours?

Working fine for me. Have you tried resetting your password?

[alistar_mid]

Anyone else been having problems trying to sign in the past 24 hours?

Try resetting your router. And switching your computer on and off. And on.

[BJ1]

No problems using Chrome on my tablet but Explorer on my desktop doesn't even allow me to access reset.

[BJ1]

So, this morning I received an email informing me that Harmoney's platform is no longer compatible with Internet Explorer. No explanation, no notice to investors - just a finger to the peers in P2P?

[peat]

I dont think you'll regret moving to Chrome
2018 stats shows nearly everybody has.
Even as a Microsoft engineer I use Chrome now

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[Wsp]

I see that the wholesale RAR is now trending very slightly upwards, while the retail RAR is still in a slow downward trend. I presume that Harmoney have changed something in favor of the wholesale investors and not made the same change for retail investors. Or is there some other explanation that I am missing?

https://www.harmoney.co.nz/investors/realised-annual-return

[Cool Bear]

For many months, I remember the platform RAR as below 10. From my records (I take a snapshot of my dashboard every month) the platform RAR was 9.98% at 31 May 2018 and had been dropping since then to as low as 9.72 at the end of 2018. Suddenly it is now above 10. Looking at the graph in Market Stats, the platform RAR (in the present graph) had stayed above 10% throughout. So the line had been moved up the last few days!! Occasionally, I also record down the Retail RAR and it seems the graph had been changed as well for the Retail RAR. Wonder what is the rationale for them tweaking it.

[BJ1]

I suggest the RAR adjustment is just another techo meddle and investors will not be informed as to why the platform RAR has risen but individual investor RARs haven't - no different to changing the platform so it doesn't support IE, but not bothering to tell those using it. It's not as though Harmoney have a track record of good communication and retail investor service and while it seems their business is still loss making we aren't going to see investment in doing more than is deemed essential..

[RMJH]

Is it that payment protect is now in the RAR? My RAR suddenly jumped 10 pips.

[johna]

So, this morning I received an email informing me that Harmoney's platform is no longer compatible with Internet Explorer. No explanation, no notice to investors - just a finger to the peers in P2P?

Internet Explorer is not recommended for use by Microsoft. "It's not a browser, it's a compatibility solution".

https://www.theverge.com/2019/2/8/18216767/microsoft-internet-explorer-warning-compatibility-solution

[Paddles]

I had 20+ loans due on the 4th and 5th of Feb, to date only one has been paid. I've had payments late in the past but not this many and not this long past expected.

As a side note the one loan payment that has been made now has a N/A under "payment due".

Can anyone shed some light?

[leesal]

I had 20+ loans due on the 4th and 5th of Feb, to date only one has been paid. I've had payments late in the past but not this many and not this long past expected.

As a side note the one loan payment that has been made now has a N/A under "payment due".

Can anyone shed some light?

The chap who banks the funds against the loans must have been on AL - got a big slab of repayments a few hours back.

Quality and number of loans still s#!t

[BJ1]

[QUOTE=Quality and number of loans still s#!t[/QUOTE]
No argument there. I'm sitting on 13.5% cash and taken only one loan this month.

[beacon]

No argument there. I'm sitting on 13.5% cash and taken only one loan this month.

If retail lenders are being sidetracked for the benefit of wholesalers, perhaps it is time someone checked whether they are still functioning under an appropriate license.

[BJ1]

Trouble is, Beacon, that none of us are likely to get returns as good as these on the sums we have in Harmoney. There are many things I don't like about Harmoney's systems, behaviours, practices, but every time I feel disgruntled enough to ring the FMA, I rethink as I don't want to kill the golden goose.

[beacon]

Trouble is, Beacon, that none of us are likely to get returns as good as these on the sums we have in Harmoney. There are many things I don't like about Harmoney's systems, behaviours, practices, but every time I feel disgruntled enough to ring the FMA, I rethink as I don't want to kill the golden goose.

Fair point BJ1, but returns have been good in a goldilocks economy. Harmoney hasn't been tested by a recession yet, and losses are already 4-5% of issued capital - chewing through roughly a quarter of gross income in golden times.

That works for the wholesalers, as they have this income hasslefree and without associated variable and fixed costs of bricks and mortar lending shops.

Meanwhile, the retail peer waits all day to get a measly fill of orders, if they have indeed been diverted to wholesale. Seems the golden goose has gotten too comfortable laying skinnier eggs for its core clientele.

[icyfire]

Harmoney trickles just enough loans to the retail investors so it can keep its p2p license in order to con potential borrowers into believing that Harmoney is still a p2p lending platform sticking it to the banks IMO.

[RMJH]

I think you guys may be being a bit hard on Harmoney and it's backers. Sure we would like more loans but they put their balls on the line setting up the industry and have posted significant cash losses to date. They have to find a way to make it work for them. Personally I would prefer a bigger pie with lower rates but not at the expense of loose credit procedures. This is what P2P promised but is yet to deliver here. Zopa in UK is going great guns.

[beacon]

I think you guys may be being a bit hard on Harmoney and it's backers. Sure we would like more loans but they put their balls on the line setting up the industry and have posted significant cash losses to date. They have to find a way to make it work for them. Personally I would prefer a bigger pie with lower rates but not at the expense of loose credit procedures. This is what P2P promised but is yet to deliver here. Zopa in UK is going great guns.

Harmoney deserves credit as well as a fair share of the P2P market and profits for pioneering P2P in NZ, but they will reap those rewards only if they last the distance. They have the potential, but they risk disenchanting retail investors, if the quantum of daily order fills are not worth the time and hassle it takes for retail to place them.

Start-up losses go with setting up any business - big or small, and can take years to breakeven. The profit trajectory for Harmoney is clear, so let the losses not be an excuse to not play fair or lift the quality game. The NZ unsecured lending pie is getting bigger with increasing market awareness, population and credit growth, as well as the recent RBNZ moves to constrain high-risk behaviours at mainstream banks.

Harmoney has benefitted from the first mover advantage. The question is, will Harmoney be around long enough in its current avatar, to reap the benefits if it keeps toying with the very definitions of the industry it chose to operate in?

[leesal]

Do Borrowers really care whether money is lent from peers, or institutions?? I rather suspect HM think not.

The personally addressed lending marketing literature I received this week only mentioned they're P2P in the smallprint. Instead they're marketed the simplicity of applying online, the membership (308,000 members), and $1 billion funded.

Here is a graph of the huge differences between late last year and early this. Last year I funded 80 loans a week while being picky, this year struggle to get 20 per a week including stuff I normally wouldn't touch with a bargepole.

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HM volume over time stats show lending is still strong(between 300-400 per week), no drop-off. While institutional lending is upto 85%.

[Wsp]

For many months, I remember the platform RAR as below 10. From my records (I take a snapshot of my dashboard every month) the platform RAR was 9.98% at 31 May 2018 and had been dropping since then to as low as 9.72 at the end of 2018. Suddenly it is now above 10. Looking at the graph in Market Stats, the platform RAR (in the present graph) had stayed above 10% throughout. So the line had been moved up the last few days!! Occasionally, I also record down the Retail RAR and it seems the graph had been changed as well for the Retail RAR. Wonder what is the rationale for them tweaking it.


You were right

This was published by Harmoney

RAR Correction
By Nitin Prasad. Posted 22 February 2019.

There has been a correction made to the RAR reported on the website. This impacts both the Platform RAR numbers (Retail, Institutional, Combined) and your personal RAR. The net impact on Platform RAR is an increase of 0.12% (12bps) across all lenders with some lenders negatively impacted and some positively impacted. Smaller accounts with minimal diversification may see a larger change in RAR. Your individual RAR will be updated in your dashboard. This is a reporting correction and does not impact your cash or principal balance.

[myles]

Taking stock of Harmoney's poor loan availability over the last 4-5 months and have decided to move some money out.

Having had a quick look around of what's available, Squirrel looks to be an easy choice for minimal effort to get some 'better than bank' returns. Any other suggestions?

I stopped investing in Lending Crowd quite some time ago as I felt their platform was broken - when you don't have time to review a loan before investing, it's simply to much of a risk (my net average return on LC is listed as 13.99% on a high of around $5K down to about $1K now).

Haven't posted a summary of my Harmoney results for a while (100K invested almost 2 years ago):

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With near $20K doing nothing at the moment means I'm better off getting ~7% elsewhere...

My calculated return (XIRR) for the investment is currently at 14.61% (dropping at the moment due to non invested $'s). That value includes tax, but not tax deductions, so actual is a little higher.

I have another Harmoney account with a more conservative loan spread (higher in C's) which has a RAR of 15.02%, but it suffers from the same issue of availability of loans and I've pulled some $'s out of it already.

I hope things change - either more loans, or Harmoney swing the Wholesale:Retail ratio back a bit, but I can't hold out any longer...

[beacon]

Taking stock of Harmoney's poor loan availability over the last 4-5 months and have decided to move some money out. Having had a quick look around of what's available, Squirrel looks to be an easy choice for minimal effort to get some 'better than bank' returns. Any other suggestions?




... it suffers from the same issue of availability of loans and I've pulled some $'s out of it already. I hope things change - either more loans, or Harmoney swing the Wholesale:Retail ratio back a bit, but I can't hold out any longer...


I've pulled out 10% of my capital too recently, for the same reasons. Squirrel return simply became unappealing to me, especially after their latest changes. Frustrated capital frequently jumps the Q there too.


Approximately 6 months ago, Cool Bear had suggested I look at Zagga. I don't know how well others are doing there, but I've only been able to invest in a couple of loans there, in that time.


So, unless the industry watchdogs lift their game, P2P in NZ looks set to be dominated by the big fish. A bit sad, that smaller investors can't even invest easily in the asset class that seemed tailor-made for them.

[leesal]

4 loans on this morning, most I've seen together for a few weeks.

Two of them have defaults though (strangely both the defaults graded as B's)

Hopefully the beginning of better availability?

[leesal]

I've pulled out 10% of my capital too recently, for the same reasons. Squirrel return simply became unappealing to me, especially after their latest changes. Frustrated capital frequently jumps the Q there too.


Approximately 6 months ago, Cool Bear had suggested I look at Zagga. I don't know how well others are doing there, but I've only been able to invest in a couple of loans there, in that time.


So, unless the industry watchdogs lift their game, P2P in NZ looks set to be dominated by the big fish. A bit sad, that smaller investors can't even invest easily in the asset class that seemed tailor-made for them.

Re squirrel. Completely agree that the returns aren't great, although I'd only ever use to poke money their during the short term and sell on the secondary when options pick up elsewhere.

However, the queue jumpers is a real problem. Have had a couple of orders on - 8.25% for about a couple of weeks and a second at 8.00% for just over a week, neither have been filled. Theres a good chance the frustrated capital may end up being yours!

Maybe Zagga is worth looking at, don't know the first thing about it.

[CageyB]

Taking stock of Harmoney's poor loan availability over the last 4-5 months and have decided to move some money out.

Having had a quick look around of what's available, Squirrel looks to be an easy choice for minimal effort to get some 'better than bank' returns. Any other suggestions?



I've been putting money into Squirrel rather than Harmoney for a while, but Squirrel, too, seems to be dropping off in loan availability lately. I had been using their 6% 1-year loans as a source of better-than-term-deposit rates, but now even $500 can take a week or more to be taken up. My Harmoney account still has ~15% unallocated funds, and there's a couple of auto-lends per week, but the book as a whole is deflating slowly. I would also like to hear any other ideas.

[myles]

Hmm - signed up for Squirrel but might not jump just yet:

6% for 1 Year (not guaranteed 1 year if not sold on secondary market) - 1 Yr Term Deposit on $10K = 3.5%.
6.9-7% for 2-3 years (based on about $50K in the queue) - 3yr Term Deposit of $10K = 3.8%
7.5% for 5-7 years (based on $50K in the queue) - 5 yr Term Deposit on $10K = 3.95%

Those numbers just don't look good enough to me :( and I'm not keen to lock money in long term at low rates at this point in time.

I think I'd do better taking some A's and B's from Harmoney or re-persisting with LC and placing some larger amounts based on their lower default rate.

Hmm...

The P2P market seems to be stuffed (driven down by too many investors or taken over by the banks...). Perhaps I'm being too pessimistic ;(

[Bjauck]

NZ P2P does seem to be becoming dominated by the wholesale investors. Harmoney’s institutional investor % of loans has been continually edging up over time.
https://www.harmoney.co.nz/investors/marketplace-statistics

At least with squirrel the return offered is after both their fees and their charge to the reserve fund to cover write-offs. With the others you may or may not be able to deduct write-offs for tax.

[myles]

LC's delay between loan listing and email is atrocious...

Only way to 'manually' invest is to auto-refresh every 30-60 secs and watch it - still very broken...but perhaps usable...

LC flex rates are pretty poor - makes Harmoney A's and B's look even better...

[leesal]

Re LC - Its only really worth it to invest in the 10% interest flex. The 25% flex helps increase the volume through agents. Altogether though unfortunately very few loans.

Bjauck - squirrels interest rate would be closest to HM A3 (9.2% less 15% = 7.8%). I don't attribute any value to loan shield, as the cost of HM defaults at that grade should be low.

[myles]

Some may find this of interest - Liquidity of Harmoney Loans:

For the nearly 2 years I've had ~$100K invested, the average age of my Paid Off loans (1370 Loans) is 255 days and the average age of my current loans (996) is 369 days. [Charged off loans average age is 348 days]

I guess if things go to custard these figures will change, but Liquidity, perhaps, is not such a big issue when compared to the alternatives (if you want to at least keep up with inflation).

Not sure if this is similar across all P2P markets though?

NB: Total turnover for my loans has been $265,475.00 [added] and that doesn't include re-investing $20K - so in 2 years about a 3x turnover.

[leesal]

Some may find this of interest - Liquidity of Harmoney Loans:

For the nearly 2 years I've had ~$100K invested, the average age of my Paid Off loans (1370 Loans) is 255 days and the average age of my current loans (996) is 369 days. [Charged off loans average age is 348 days]

I guess if things go to custard these figures will change, but Liquidity, perhaps, is not such a big issue when compared to the alternatives (if you want to at least keep up with inflation).

Not sure if this is similar across all P2P markets though?

NB: Total turnover for my loans has been $265,475.00 [added] and that doesn't include re-investing $20K - so in 2 years about a 3x turnover.

Not for the faint hearted!

My repayment rate is tracking at 2% of principal repayments of outstanding per week, which annualises to 65%. Not too bad if you want to get out quick.

Dovetails in with your figures. Invest $x p/a to hold a book of $x (where x is insert your chosen portfolio size).

[Cool Bear]

Taking stock of Harmoney's poor loan availability over the last 4-5 months and have decided to move some money out.

.......................
.......................
I hope things change - either more loans, or Harmoney swing the Wholesale:Retail ratio back a bit, but I can't hold out any longer...
In January 2018, I invested in over 500 new loans for that month. Had been downhill after that. January 2019, only 79. This month, will be lucky to hit 50. Took out about 25% in cash in the last 12 months and despite that the cash balance is still growing too fast.

Over at Zagga, there does not seems to be enough investors and (the very few) loans take quite a number of days to fill and sometimes cannot be filled. Admittedly the loans there are quite large - sometimes well over $1m. So maybe some of you with loads of spare cash can go there and help out.

[alistar_mid]

Some may find this of interest - Liquidity of Harmoney Loans:

For the nearly 2 years I've had ~$100K invested, the average age of my Paid Off loans (1370 Loans) is 255 days and the average age of my current loans (996) is 369 days. [Charged off loans average age is 348 days]

I guess if things go to custard these figures will change, but Liquidity, perhaps, is not such a big issue when compared to the alternatives (if you want to at least keep up with inflation).

Not sure if this is similar across all P2P markets though?

NB: Total turnover for my loans has been $265,475.00 [added] and that doesn't include re-investing $20K - so in 2 years about a 3x turnover.

yeah I found if you put a bunch of money in across a diversified loan spread and don't re-invest you will get about 50% of your money back via interest and loans being paid back early, i the first year.

Mirin your returns btw myles - I invested just over $100k initially and have left it withdrawal out til I got to a balance of $50k which is where I am at now. I've been in about 2.5 years.

[myles]

Over at Zagga, there does not seems to be enough investors and (the very few) loans take quite a number of days to fill and sometimes cannot be filled. Admittedly the loans there are quite large - sometimes well over $1m. So maybe some of you with loads of spare cash can go there and help out.

CB, do you know how much of the single listed default loan was recovered. The Zagga model is quite different to others. Having to invest much larger sums in limited loans increases the risk from not diversifying. However, if their loans are as well sourced and secured as they suggest, it might be worth the risk.

Are the loans under the 'Search Loans' tab, currently available loans with the % value the amount funded? When I first saw that I was confused and thought that the % was the rate which made no sense with same 'grade' i.e. C4 loans with large rate ranges i.e. from 7.59% to 14.39%:

10345

10346

How long does it typically take for those loans to actually get filled - I assume you need to have the funds sitting idle while the loan is filled?

Thanks CB.

[Cool Bear]

CB, do you know how much of the single listed default loan was recovered. The Zagga model is quite different to others. Having to invest much larger sums in limited loans increases the risk from not diversifying. However, if their loans are as well sourced and secured as they suggest, it might be worth the risk.

Are the loans under the 'Search Loans' tab, currently available loans with the % value the amount funded? When I first saw that I was confused and thought that the % was the rate which made no sense with same 'grade' i.e. C4 loans with large rate ranges i.e. from 7.59% to 14.39%:

10345

10346

How long does it typically take for those loans to actually get filled - I assume you need to have the funds sitting idle while the loan is filled?

Thanks CB.

I address your last question first. You do not have to deposit funds with Zagga at all. Only after a loan gets filled, they will email you and give you a date when your agreed investments must reach them. So no idle funds in that sense.

The interest rates seems to be all over the place. The grading is based on risk of defaults as well as LVR (loan to value ratio). They do have a guide on what interest rate they charge for each grade but they seems to deviate from that and treat each case on its merit.

When a loan is published, there are a ton of information. Everything is disclosed, name of person/s (company), their credit ratings, sale and purchase agreement (if applicable), their income, their assets and liability, valuation of the property, etc etc.. So you can take your time to decide. You are much closer to a loan officer in a bank than with Harmoney or the others.

As for that default, the LVR was really low, well below 50%, so nobody lost any money yet.

Loans take days to weeks to fill. Sometime not at all. So it is the other way round - not enough investors or maybe not enough investors willing to part with their money. They also have a feature where an investor can come in and take the whole amount of loan (before it is filled) and kick out all the others. So far happen to only one loan where I pledge a few thousand$. By the way, minimum investment in a loan is $1000.

[myles]

Thanks CB, much appreciated. Certainly sounds less time consuming/stressful than other P2P models.

[Vagabond47]

Is the low volume of retail loans on Harmoney typical of this time of year, or is this much slower than normal? I've been sort of busy at work, so haven't been able to reinvest much, since everytime I check there are either no loans, or only rubbish I wouldn't go near.

[Gill]

I don't even bother with Harmoney anymore, seems like all the good loans are being diverted to the wholesale market.

[Cool Bear]

Is the low volume of retail loans on Harmoney typical of this time of year, or is this much slower than normal? I've been sort of busy at work, so haven't been able to reinvest much, since everytime I check there are either no loans, or only rubbish I wouldn't go near.

It is very much reduced.

The number of loans I invested in for one of my pooled fund:
Jan2018 520 loans vs Jan2019 79 loans
Feb2018 408 loans vs Feb2019 54 loans

[Soolaimon]

Been with Harmoney since the beginning but now had enough. The effort not worth it now but it has provided a nice supplement to bank term deposits over the time. In full withdrawal mode now for the last 6 weeks.
Doing the same at Lending Crowd.

[Saamee]

Been with Harmoney since the beginning but now had enough. The effort not worth it now but it has provided a nice supplement to bank term deposits over the time. In full withdrawal mode now for the last 6 weeks.
Doing the same at Lending Crowd.

Hey @ Soolaimon > So what is your next investment strategy?

[Soolaimon]

Hey @ Soolaimon > So what is your next investment strategy?

I have been at it for more than 50 years now, shares, bonds, cfds, options and P2P. Now moving to more cash ie. term deposits etc. One gets a little more conservative as one gets longer in the tooth.... and, it will take 5 years to wind up the P2Ps.
Cheers.

[Saamee]

I have been at it for more than 50 years now, shares, bonds, cfds, options and P2P. Now moving to more cash ie. term deposits etc. One gets a little more conservative as one gets longer in the tooth.... and, it will take 5 years to wind up the P2Ps.
Cheers.

Good to hear back from you :)

Cash at hand, in times like those quite likely coming is a good thing!

This was a great read today > https://www.interest.co.nz/personal-finance/98428/banks-pick-pace-term-deposit-offer-changes-rate-levels-shift-tight-bunch

I still feel P2P Investments will be safe in troubled time because our $$'s have already been spent by the Borrowers - It cannot be stolen or taken by the establishments!

[BJ1]

Just arrived in my inbox - a communication from harmony about their joining the investment group, using BNZ money - and we retail investors continue to get what we've always got.

Yeah, right.

[myles]

There does now seem to be a real gap between what Harmoney say and what they do :(

In the last 3 years the Retail:Institutional loan volume split has gone from 70% to 85% in favour of Institutions (note that this is a halving of the retail allocation). This last communication indicates that overall volume has increased - this is clearly not showing as available loans to retail lenders in practice. So where are all the additional loans going? From a retail investors point of view these details don't add up.

It would be good to know how/why Harmoney allocate the split between retail and institutions as part of their "transparency of our platform", which they pride themselves on.

I have noticed a rise in loan volume in the last week or so, but it is a long way from being half of the volume of say 6 months ago - especially if loan volume overall has increased... Is it still just the time of year! (hmm, perhaps that's worth plotting a volume over time graph for)...

[beacon]

It is very much reduced.

The number of loans I invested in for one of my pooled fund:
Jan2018 520 loans vs Jan2019 79 loans
Feb2018 408 loans vs Feb2019 54 loans

My numbers are smaller than yours Cool Bear, but I have also only done roughly 10% of the volume this Feb as compared to Feb last year. My January volume was also roughly 20% of my Jan numbers last year.
So, definitely a big shift in loan volume away from retail lenders to institutional lenders recently, regardless of whether the loan volume lifted or fell overall due to seasonality.

Securitization is definitely an innovation whose time seems to have come in New Zealand. Although I read today that "In Australia, a $120 mln residential mortgage bond made up of Suncorp mortgages suffered defaults to a trigger level where investors may not get all their money back. It is being described as a 'canary' moment." And Harmoney loans aren't even secured, but kudos for this are due to Harmoney nevertheless.

[IntheRearWithTheGear]

Dont know if anybody has noticed most loans hit the market 65% filled - which is most likely the intuitional investors getting their slice first. And the remainder go to us plebs. Not sure if the 65% is includes auto loaned as well.

Given the market, i here lots of radio airtime for gem and moola – (especially on the Polynesian radio stations - perhaps they are nibbling all the loan or perhaps just not enough stock maybe the loans interest rates are not correct market wise.

[Vagabond47]

As I understand it loans that go to the instututional pool we never see, so the 65% is probably the autolend.

[kiwi_on_OE]

From my perspective the quality of the loans has also gone down since Xmas - so Harmoney telling porkies on volume and quality

[BJ1]

A cynic would suggest that Harmoney has decided that the only way to make a buck given what is a fairly static portfolio total is to make a margin on loans subscribed for by Harmoney itself. Essentially that is what the announcement indicates, in which case retail is likely to continue to see what both kiwi on oe and I have seen the past few months - poor quantity and quality; and why wouldn't the platform cherry pick the loans?

[myles]

and why wouldn't the platform cherry pick the loans?

Because it would likely lead to a huge fine and/or some time in jail... I personally don't believe this is happening.

[nickw]

One of the main points about investing in P2P is the diversification of the funds and the importance of having a small amount of investment in many loans. This is a key point that Harmoney make to all investors. Only last month (February), the Lender blog was discussing imaginary portfolios by Jack and Sarah, and the importance of spreading the risk over a large number of loans.
https://www.harmoney.co.nz/lender-blog/focus-on-the-marketplace-rar-by-unique-loans

It seems ironic that Harmoney should continue to impress the importance of diversification whilst at the same time reducing the number of loans available to invest in. As of the time of writing there were only 5 loans in the last 24 hours.

[RMJH]

One of the main points about investing in P2P is the diversification of the funds and the importance of having a small amount of investment in many loans. This is a key point that Harmoney make to all investors. Only last month (February), the Lender blog was discussing imaginary portfolios by Jack and Sarah, and the importance of spreading the risk over a large number of loans.
https://www.harmoney.co.nz/lender-blog/focus-on-the-marketplace-rar-by-unique-loans

It seems ironic that Harmoney should continue to impress the importance of diversification whilst at the same time reducing the number of loans available to invest in. As of the time of writing there were only 5 loans in the last 24 hours.

Pity they don't provide specific usable advice, for example how many loans of a particular grade is enough to give the expected return to a specified probability. The generic "don't recommend more than 4 units in one loan" is absurd because it takes no account of portfolio size.

I'm thinking a better way to maintain, or even grow, investment might be to reduce diversification rather than drop filters. I have 1000's of loans, maybe that could be 100's with a negligible increase in volatility of returns? Anyone know how to crunch the stats or got some rules of thumb?

[beacon]

One of the main points about investing in P2P is the diversification of the funds and the importance of having a small amount of investment in many loans. This is a key point that Harmoney make to all investors. Only last month (February), the Lender blog was discussing imaginary portfolios by Jack and Sarah, and the importance of spreading the risk over a large number of loans.
https://www.harmoney.co.nz/lender-blog/focus-on-the-marketplace-rar-by-unique-loans

It seems ironic that Harmoney should continue to impress the importance of diversification whilst at the same time reducing the number of loans available to invest in. As of the time of writing there were only 5 loans in the last 24 hours.

Loan numbers have been dismally low for most of the moons since before Christmas now. That's three months, compared to the last time they did this for a month or so - in June last year.

[myles]

I'm thinking a better way to maintain, or even grow, investment might be to reduce diversification rather than drop filters. I have 1000's of loans, maybe that could be 100's with a negligible increase in volatility of returns? Anyone know how to crunch the stats or got some rules of thumb?

First read this Lender Risks (https://www.harmoney.co.nz/investors/investment-risks) and this Diversification (https://www.harmoney.co.nz/investors/diversification), both contain some good info.

I posted my thoughts on this a ways back - it went something like this: (note this is based on my loan selection of typically C and D grade loans)

For a $10,000 investment, diversify at $25 per loan - this is the minimum for Harmoney (an investment smaller than this has a potentially higher risk due to lack of diversification). This works out at 400 loans (on a fixed set of loans 10000/25). If one loan defaults, that works out at a loss of (25/10000)*100 = 0.25% of initial investment (based on loan defaulting from day one). The overall average default rate varies depending on loan selection.

My thinking is that the above ratio of loss is more than acceptable (industry suggested diversification rate is 1% - 100 loans).

So my thinking is that a minimum of 400 'whole' loans (or more), no matter the investment size, will give 'enough' diversification. So for an investment of $50,000, a loan size of 50000/400 = $125 per loan will give the same level of diversification.

In actual fact the diversification is much better than this since, as loans age, they become smaller (partially paid off), so although, in the previous $50,000 example, 400 loans are invested at $125 each, over time, this will result in many, many more loans than the initial 400 as older loans shrink over time.

So my suggested diversification volume is 400 'whole' loans (or more) for whatever total value you invest.

Added: I currently invest in 8 - 10 notes per loan ($200 - $250) based on over $100K invested. I believe this is probably still significantly more diversification than required, but I'm happy with that level. (I currently have around 1000 loans).

[RMJH]

Thanks Myles. It has been a while since I thought about this but I think the rules of thumb be it 100 or 200 etc are focused on not making a loss rather than providing confidence intervals around expected returns. Seems like about 1000 loans are required to practically remove random volatility of returns. And that's per grade not total portfolio. An impossible task given current listing numbers. I've posted this article before but it's still thought provoking https://www.lendingmemo.com/risk-diversification-p2p-lending/

[Saamee]

Harmoney to raise 25 Mill this year...

https://www.interest.co.nz/banking/98491/harmoney-looking-raise-25-million-new-equity-year-founder-neil-roberts-says-peer-peer

[RMJH]

Harmoney to raise 25 Mill this year...

https://www.interest.co.nz/banking/98491/harmoney-looking-raise-25-million-new-equity-year-founder-neil-roberts-says-peer-peer

Pity we can't participate!

I think it used to be a good deal more than 57% of applications rejected but maybe that reflects better algorithms?

[Wsp]

Anz has recently started reporting more information to credit reporting agencies. This can have a substantial affect on credit scores and will help improve their accuracy. Harmony relies heavily on prospective borrowers credit rating for loan grading purposes. So you would expect, given ANZs market share, that loan grading will now be more accurate from Harmoney.

[Wsp]

Pity they don't provide specific usable advice

They probably can't because that would likely be considered financial advice and there are various rules around who can offer financial advice.

[RMJH]

They probably can't because that would likely be considered financial advice and there are various rules around who can offer financial advice.
Fair point

[beacon]

I think it used to be a good deal more than 57% of applications rejected but maybe that reflects better algorithms?

Yes, they had reported rejecting 77% of applications approx 18 months ago. Forecast default rates were updated in v1.5 around the same time. Subsequently, increased ANZ disclosures to credit reporting agencies should have helped better inform the credit ratings of borrowers, but has Harmoney vetting and reporting improved otherwise? I am not sure.

[myles]

Seems like about 1000 loans are required to practically remove random volatility of returns. And that's per grade not total portfolio.

Simply out of interest, the following two graphs are ones I use to 'track' my portfolio and may offer some insight into 'volatility' of loan value vs defaults:

10378
CRAR is my calculated return on current loans - this shows the movement over time of the calculated rate of return of my approx 1000 current loans. Obviously the higher risk grades are more volatile. [A and F grades not shown due to low numbers.] I really don't think it would be possible to provide detail on the number of loans you should invest in for a stable return as loan selection plays such a large part.

10379
Harmoney's arrears value on the left green/brown plot (I don't have much faith in it as I've never been able to work out how they work it out...), charge off value on the right orange plot. From what I can tell Harmoney can often process charge offs in 'lumps', hence the 'chunky' graph.

Note: maturity of portfolio has an impact.

Over Diversification: One thing I forgot to add was that I think over diversification is a real 'thing'. If too high a number of loans is aimed for, you tend to start reaching for loans either outside your risk profile or perhaps loans that are best left alone, just to ensure a large spread (diversified) set of loans. This will very likely reduce the value of the loan set and increase the volatility of the overall portfolio.

[beacon]

While returns to date from Harmoney have been comparatively good for all investors - big and small, Harmoney is showing a growing propensity to sideline the core peers so it can play with the big fish. Retail investors have recently become increasingly forced to withdraw their invested capital, as it has been repaid and has sat idle for months while wholesalers were being filled. In a P2P theatre, why is institutional money being prioritized over retail? While Harmoney's loan securitization may be good for NZ Debt sector, how is it good for the kids if their pocket money has to be choked off so Mama Harmoney can send a packet over to affluent Uncle Benz?

If Harmoney wants to behave like a Non Banking Financial Institution, ignoring its loan volume and loan quality obligations to its core peers while paying lip service to them, perhaps it is time it operated and fulfilled its obligations under a more appropriate license. If I were FMA, I would NOT renew Harmoney's P2P license UNLESS it committed to:

1. Directing at least 51% of its loan volume to retail peers, keeping within the spirit of its license
2. Maintaining at least loan quality equanimity between its retail and institutional investors

I would also certainly NOT renew Harmoney's P2P licenses for terms any longer than annually for the time being, until I was satisfied that Harmoney had learnt to respect its P2P license terms.

[Joshwnz]

What are the risks to existing investors in the case where Harmoney loses its license? Would Harmony close up shop? What are implications to existing loans outstanding and their lenders?

[beacon]

What are the risks to existing investors in the case where Harmoney loses its license? Would Harmony close up shop? What are implications to existing loans outstanding and their lenders?

I should expect no change to existing loans, but no new business for any clients under P2P framework - which doesn't seem too much of a loss from where we have arrived now with capital sitting idle and less than 10 loans a day for retail peers - which come 65% auto lent and are gone in a flash - or two!

Harmoney (or its agent) would still be up and running until all outstanding loans have defaulted/been fully paid off. There must be something about this under lender risks.

[leesal]

Should FMA renew Harmoney's P2P license for a further 5 years or longer term?
While returns to date from Harmoney have been comparatively good for all investors - big and small, Harmoney is showing a growing propensity to sideline the core peers so it can play with the big fish. Retail investors have recently become increasingly forced to withdraw their invested capital, as it has been repaid and has sat idle for months while wholesalers were being filled. In a P2P theatre, why is institutional money being prioritized over retail? While Harmoney's loan securitization may be good for NZ Debt sector, how is it good for the kids if their pocket money has to be choked off so Mama Harmoney can send a packet over to affluent Uncle Benz?

If Harmoney wants to behave like a Non Banking Financial Institution, ignoring its loan volume and loan quality obligations to its core peers while paying lip service to them, perhaps it is time it operated and fulfilled its obligations under a more appropriate license. If I were FMA, I would NOT renew Harmoney's P2P license UNLESS it committed to:

1. Directing at least 51% of its loan volume to retail peers, keeping within the spirit of its license
2. Maintaining at least loan quality equanimity between its retail and institutional investors

I would also certainly NOT renew Harmoney's P2P licenses for terms any longer than annually for the time being, until I was satisfied that Harmoney had learnt to respect its P2P license terms.

Well written and a very adroit point. And with the current trickle of loans in which 20+ retail loans are being paid back daily and only 6-10 offered simply is not on.

But to play devils advocate and out of curiousity (as don't know), what compliance/barriers/costs are there preventing switching to a framework similar to Moola/Gem/Finance Direct and leaving P2P in runoff??

ie HM rhetoric indicates it is still committed to P2P, but its actions suggest otherwise. Which suggest to me it would be costly to transition away from P2P, so does the minimum required to keep its license.

[RMJH]

I would hate for Harmoney to lose its license but it does increasing seem that it's P2P status is merely a flag of convenience.

[myles]

The issue comes down to the definition of what Peer-to-Peer is. Unfortunately the FMA use words like 'people' when referring to a peer??? I think it all comes back to ComCom not putting in any/enough effort when P2P first started in NZ.

As far as FMA is concerned Harmoney are playing fair and are very transparent in what they are doing - they clearly state that they can and will adjust the Institution:Retail ratio.

The only possible issue is in their advertising - however I don't think they say things like "kiwi's borrowing from kiwi's" anymore (I think they did in early days.), so that's probably not something that can be actioned either.

It is what it is I'm afraid...

[BJ1]

As far as FMA is concerned Harmoney are playing fair . Myles, can you direct me to the FMA's latest report on Harmoney, please?

[myles]

. Myles, can you direct me to the FMA's latest report on Harmoney, please?

What report? There has been no complaint/investigation against Harmoney that I'm aware of i.e. no issue? The latest P2P industry data is here: P2P Snapshot (https://www.fma.govt.nz/news-and-resources/reports-and-papers/peer-to-peer-and-crowdfunding-sector-snapshot/), if that's what you mean?

Even the FMA highlight the availability of loans as a 'risk': FMA Advice (https://www.fma.govt.nz/investors/ways-to-invest/peer-to-peer/)

[BJ1]

So why did you assert that the FMA consider that Harmoney is playing fair?

[myles]

So why did you assert that the FMA consider that Harmoney is playing fair?

Because they (Harmoney) haven't done anything that they haven't been transparent about or that is unfair?

What exactly do you think Harmoney have done that needs the attention of the FMA?

[BJ1]

My point is that you draw a long bow to conclude that the FMA consider Harmoney to be squeaky clean, when there is no evidence to even indicate that the FMA have looked beyond annual reporting by Harmony itself. As to what Harmoney might be doing "wrong" perhaps a closer look at how there are minimal collections on written off loans where the borrowers owned houses, might be a start.

[myles]

My point is that you draw a long bow to conclude that the FMA consider Harmoney to be squeaky clean, when there is no evidence to even indicate that the FMA have looked beyond annual reporting by Harmony itself. As to what Harmoney might be doing "wrong" perhaps a closer look at how there are minimal collections on written off loans where the borrowers owned houses, might be a start.

In the context of the conversation regarding allocation of loans, what have Harmoney done that is unfair?

If you believe Harmoney aren't operating within the License that the FMA administer then take it up with them. I personally don't like the poor recovery of defaults ($131.15 from $5,895.03 for my portfolio), but see it as being within the industry wide norm - price of being in the lending game... Harmoney are upfront (transparent) with default rates etc., so again, I don't see anything that is actionable.

Added: Looking at the recovery value the way I have, is probably very unfair to Harmoney - the $131.15 is recovery from loans over 180 days old, I have no doubt that a significant amount is chased/recovered prior to a default getting to this stage.

[Bjauck]

The proportion of institutional funding to retail funding has been gradually tracking up. This is despite unsatisfied retail lender demand. The conclusion must be that Harmoney prefer the institution lender “peers”. With Harmoney itself also becoming an institutional lender, could it be that retail lenders will be further squeezed into a small proportion of available notes.

https://www.harmoney.co.nz/investors/marketplace-statistics
Retail vs Institutional Funding graph at end of page.

[RMJH]

The proportion of institutional funding to retail funding has been gradually tracking up. This is despite unsatisfied retail lender demand. The conclusion must be that Harmoney prefer the institution lender “peers”.

https://www.harmoney.co.nz/investors/marketplace-statistics
Retail vs Institutional Funding graph at end of page.


I don't know but that may just be the stats for the market open to retail investors....

[myles]

From 4 or 5 pages back:

In the last 3 years the Retail:Institutional loan volume split has gone from 70% to 85% in favour of Institutions (note that this is a halving of the retail allocation).


The conclusion must be that Harmoney prefer the institution lender “peers”.

Or does it have something to do with Business Continuity?

Added: The danger for Harmoney - something Leesal highlighted a little while back - are borrowers happy that they are not borrowing from other Kiwi's... If the borrowers begin to care, it could be a real risk to Harmoney's future - i.e. without borrowers...

[Bjauck]

From 4 or 5 pages back:




Or does it have something to do with Business Continuity?

Added: The danger for Harmoney - something Leesal highlighted a little while back - is if the borroweres are happy that they are not borrowing from other Kiwi's... If the borrowers begin to care, it could be a real risk to Harmoney's future - i.e. without borrowers...
Is another risk that there may be an investigation by the FMA if it receives complaints from disgruntled retail lenders, who are forced to withdraw funds for lack of available notes as a result of the increased proportion allocated to instos?

Halving the allocation to retail lenders indicates they prefer their institutional lenders. They could adjust the institutional mix to 90 or 95% for “business continuity” in the future?

[myles]

They could adjust the institutional mix to 90 or 95% for “business continuity” in the future?

Or 100% if that's what it takes for them to continue. Would that be grounds for any action - quite possibly not.

I have hope that the current situation is a 'growth phase', that at some point will turn back, but it is only a hope.

[alundracloud]

I e-mailed Harmoney regarding retail loan volumes last month. Below is my e-mail, and their response..


Good afternoon,

Looking at the marketplace statistics page on the website, it looks as though the percentage of money being diverted to Institutional investors is now as high as 80% of all money lent through Harmoney.


I'm a big fan of Harmoney, and wish to increase my portfolio of loans over 2019 and beyond. However, I'm finding it incredibly difficult to invest in new loans, and no doubt this is the same story for other retail investors.


I was wondering if you could provide an update, or guidance of when retail investors can expect to see an increased number of loans on the retail marketplace?


Kind regards,
alundracloud



​Hi alundracloud,


Thank you for your email.


Yes, the current allocation is set to ~80% Wholesale and ~20% Retail, however, these percentages are monitored by the Exec Team and changed depending on the overall volume received as well as monthly targets.


The percentage allocation for Retail was around the same for January, however, we had higher volumes in January (~$35m overall). This would be why there would be a noticeable drop in the number of investment opportunities for the month of February as our overall volume for Feb was around $30m.


We tend to see the overall volume increase in March, historically, and do hope to see more investment opportunities available to Retail. This can come about with more volume or a higher percentage allocation. Our Marketing team is working to have the volume increased as much as possible.


To help in deploying your funds, please try checking the Marketplace between 9-11 AM and then again between 2-4 PM. We see favorable volumes of loans during those times.


Hope this helps and have a great weekend.

Read into it what you will, but I struggled to take anything positive from the response. :(:(

[Bjauck]

Or 100% if that's what it takes for them to continue. Would that be grounds for any action - quite possibly not.

I have hope that the current situation is a 'growth phase', that at some point will turn back, but it is only a hope.
Is it still peer-to-peer, if institutional “peers” are treated differently from other peers? I think the spirit of peer-to-peer is lost. Also the allocation of loans to different market places for instos and retail is contrary to what I imagined was the concept of P2P. However it may still pass muster as far as the FMA is concerned.

[myles]

Is it still peer-to-peer, if institutional “peers” are treated differently from other peers? I think the spirit of peer-to-peer is lost. Also the allocation of loans to different market places for instos and retail is contrary to what I imagined was the concept of P2P. However it may still pass muster as far as the FMA is concerned.

That, I believe, is one of the main issue with P2P in NZ, it (peer-to-peer) was never clearly defined by ComCom.

The whole concept of peer-to-peer is more about doing away with the central controlling entity and allowing peers to more closely interact with each other. Within the constraints of privacy and security, this is how the Harmoney platform works, both for retail and institutional investors.

I agree that it is not in the 'spirit' of what most think P2P to be, but does that matter?

[BJ1]

It seems fairly simple to me - Harmoney has been losing money from day one by running a P2P platform, so has decided that borrowing money from a bank and taking a lending margin is the way to keep its business alive - so as retail lenders we should not expect any better than what we are getting.

[myles]

We tend to see the overall volume increase in March

Waiting, waiting, waiting...

[jallison]

Lack of investment in Harmoney market place may in hindsite be a good thing 180000 principle in Nov2018 now down to 115000 and writeoffs have jumped from under 5000 to just over 8000 in that time although my investment parameters have been the same
Has anybody else experiencing high white off lately

[myles]

Has anybody else experiencing high white off lately

I noticed a bit of a jump early in the new year, but thought that was a processing catch-up (pretty sure a similar jump last year). Overall my charge offs are tracking fairly consistently.

How old is your portfolio? Depending on when you invested the bulk of your $'s there is typically a significant hit of defaults as they work through - typically this is anywhere between 9 months (if you invest quickly) and 14 months (if you ramp up from a slower start).

[BJ1]

Jallison: I have experienced an increase in arrears and subsequent write-offs in recent months, some arrears appearing for the first time with more than one instalment unpaid. I'm not convinced that arrears management meets industry standards, nor do I have confidence in the process whereby our investments are onsold to other parties - I've never seen or heard of any external audit around this procedure.

[jallison]

3 and a half years slow at first but 120000 steadily over last 2 years. don't get me wrong happy with returns 15.4% rear and 70000 interest but thought my greater writoffs may reflect slowing economy

[myles]

The second graph in this post (https://www.sharetrader.co.nz/showthread.php?10065-Harmoney&p=750573&viewfull=1#post750573) shows my last ~6 months of charge offs (orange) and reducing arrears. If you draw a straight line through the orange graph, that's pretty consistent for me. It's difficult to generalise as all portfolios are different. Just as an example; you may have purchased a lot of loans last Christmas that are now defaulting, where I didn't - so many variables.

[beacon]

I agree that it is not in the 'spirit' of what most think P2P to be, but does that matter?

Myles, I respect you for what I have learnt from your posts here in the last 2 years, and for the care and effort visible in your contributions to-date, but I think integrity matters. It should matter. Here is a little something from Warren on the matter of executive integrity (http://www.berkshirehathaway.com/letters/2018ltr.pdf )

Over the years, Charlie and I have seen all sorts of bad corporate behavior, both accounting and operational, induced by the desire of management to meet Wall Street expectations. What starts as an “innocent” fudge in order to not disappoint “the Street” – say, trade-loading at quarter-end, turning a blind eye to rising insurance losses, or drawing down a “cookie-jar” reserve – can become the first step toward full-fledged fraud. Playing with the numbers “just this once” may well be the CEO’s intent; it’s seldom the end result. And if it’s okay for the boss to cheat a little, it’s easy for subordinates to rationalize similar behavior...

[myles]

That, I believe, is one of the main issue with P2P in NZ, it (peer-to-peer) was never clearly defined by ComCom.

The whole concept of peer-to-peer is more about doing away with the central controlling entity and allowing peers to more closely interact with each other. Within the constraints of privacy and security, this is how the Harmoney platform works, both for retail and institutional investors.

I agree that it is not in the 'spirit' of what most think P2P to be, but does that matter?


but I think integrity matters. It should matter.

I wrote that from the perspective of the FMA and whether any action could be taken to change the current situation i.e. does it matter to them/can they do anything about it.

[beacon]

I wrote that from the perspective of the FMA and whether any action could be taken to change the current situation i.e. does it matter to them/can they do anything about it.

Sure, and I was hoping that my comments about integrity get shown to the Harmoney CEOs, so FMA doesn't have to get involved.

[beacon]

Or 100% if that's what it takes for them to continue. Would that be grounds for any action - quite possibly not.


100% loan allocation to instos should be grounds for revocation of any P2P organisation's P2P license. In fact, majority loan allocation to instos over sustained periods, as Harmoney has done since inception, goes against the P2P grain too, but was perhaps allowed by ComCom so this sector could open up as a viable alternative to traditional banks in the small economy of NZ.

What is happening here now is quite different, in that instos are sidelining the small lender here - and the retail lenders are being forced to withdraw capital as it is sitting idle for long periods, while wholesalers have been getting their fill. And new wholesalers are joing the Q...

In the P2P queue, wholesalers should be waiting their turn to get their fill, not the retail lenders. A lot of money is soon going to be repaid to kiwis via imminent redemptions. Harmoney should be aiming to dial down the instos to 49% (and not upping them to 85% or higher) as the retail lenders become more comfortable partnering with Harmoney. As sophisticated investors, wholesalers have multiple alternative avenues for investment which are closed off to the small guy.

[Bjauck]

I wrote that from the perspective of the FMA and whether any action could be taken to change the current situation i.e. does it matter to them/can they do anything about it.
I guess that if the current P2P regulations allow the licensee operator (Harmoney) to regulate lender peers and restrict certain loans to particular lender peers then Harmoney is safe from action. Otherwise, if their licence is silent on the issue, there could be the possibility of litigation on discriminatory practice.

[beacon]

The issue comes down to the definition of what Peer-to-Peer is. Unfortunately the FMA use words like 'people' when referring to a peer???

Heartland Bank or BNZ are not our peers, by any stretch of imagination.


I don't think they say things like "kiwi's borrowing from kiwi's" anymore (I think they did in early days.)...

Harmoney may have drifted away to their "insto" peers now (at the expense of their "retail" peers), but the general understanding of their clientele - of what a Jo Public borrower's "Peer" is, and what Harmoney meant by "Peer" when they created their initial ads, hasn't drifted with them too. I quote a quip by Warren again:

Abraham Lincoln once posed the question: “If you call a dog’s tail a leg, how many legs does it have?”
And then answered his own query: “Four, because calling a tail a leg doesn’t make it one.”

[myles]

Integrity aside (please don't read that as me dismissing it), the FMA have given Hamoney a P2P Lending license, at the time, they would have investigated/tested the Harmoney lending model, which has always included the wholesale/retail split and the ability to change it. It would be a difficult task to backtrack on that I would imagine.

Included in that license is the requirement for financial reporting and audits to the FMA (even though some here suggest that this doesn't happen).

Whether I agree or not with the changes Harmoney are making to their business model, I personally can't see that they are acting unfairly or in a non-transparent way. There is no requirement for me to like the changes...I don't of course.

However, I think Harmoney may have lost sight of why P2P is popular - "kiwi's lending to kiwi's"/"kiwi's borrowing from kiwi's". Perhaps Harmoney 'know' that borrowers don't care where the money comes from and that borrowers are only interested in getting the best/easiest loan that they can. To me, this is a very fickle business model, a few social media outcries, or the like, could see borrowers walk away in droves. Where would that business model be then?

[Bjauck]

Integrity aside (please don't read that as me dismissing it), the FMA have given Hamoney a P2P Lending license, at the time, they would have investigated/tested the Harmoney lending model, which has always included the wholesale/retail split and the ability to change it. It would be a difficult task to backtrack on that I would imagine...
I understand that you are not dismissing integrity. We have to deal with what regulations permit and what the FMA accept.

If the FMA accepts the wholesale/retail split and the ability for a P2P to reserve certain loans for certain “classes” of lender peers, then this should be clearly stated by them. On their website in the P2P section of advice for investors, there is no mention of such ability to discriminate. As such discrimination between lender peers is becoming such a material factor in retail lender peers being able to invest their money into loan notes, then at the very least, FMA should mention it on their website.

https://www.fma.govt.nz/investors/ways-to-invest/peer-to-peer/
“Lenders may be able to lend the full loan requested, or just a portion of it. The provider may also group up similar loan requests so the lender has the opportunity to invest in a variety of loans at one time”

”3. If you want to re-invest you may have to waitAt a bank you can often roll over your term deposit as soon as it falls due, but with peer-to-peer lending you may need to wait until there are peers who want to borrow it. You may miss out on some interest while you're waiting”

[myles]

Discrimination between peers (of any sort) is a very good point!

[BJ1]

When one lends to a bank one can check that bank's financial health and performance via public records. The same applies with company borrowers and share investments, so the major risks in investing in such entities are calculable from, albeit historical, public records. With Harmony it seems most investors consider that borrower default risk is the major factor, and that may be so. However, Harmony acts on investors behalves to assess loan risk accurately and to manage default risk and debt collection. I have never seen anything to indicate what sort of job Harmoney performs in this part of managing risk on our behalf. Audits generally are limited to financial management so that the readers of audits can see there has been no hanky panky with their money but generally audits do not tell readers if processes meet expectations - and there is nothing I have seen which indicates that the FMA have bothered to put in place such a reporting regime. That recoveries on written off loans, particularly loans where the borrowers own their own home, are as negligible as they are indicates lenders on the Harmoney P2P platform should not be satisfied.

[Cool Bear]

For the many here who feel strongly about the issue, why not take it up with HM itself or even better, write to the FMA.

ps. I did contact FMA on what is a reasonable split a few months ago but did not get a reply and did not follow up - perhaps more voices will be useful? Like some here (Myles included), while I want HM to be fair to us retail, I also want them to succeed as a business. Thus, I am not kicking up a fuss (yet!) up with them or FMA.

[Cool Bear]

Anyone here notice that the recoveries figures have a little jump today? Mine usually goes up a few cents or a few dollars on a good day. Today it went up $96! HM must have sold some of the bad debts today (or accounted for the sale today).

[Wsp]

I suspect harmoney allocates more to institutions because harmony receive more fees from those loans. Hence why the wholesale RAR is lowest. Would retail investors accept a greater share of the loans in exchange for higher fees?

[Wsp]

Anyone here notice that the recoveries figures have a little jump today? Mine usually goes up a few cents or a few dollars on a good day. Today it went up $96! HM must have sold some of the bad debts today (or accounted for the sale today).

No jump for me. My recoveries are currently sitting at 1.25% of charged off principal.

How is everyone else looking?

[beacon]

I suspect harmoney allocates more to institutions because harmony receive more fees from those loans. Hence why the wholesale RAR is lowest. Would retail investors accept a greater share of the loans in exchange for higher fees?

Indeed ( re the first observation) . I would be happy to pay the wholesale fees Wsp, as I wouldn't also need to spend a minute choosing, reading, buying, waiting for any loans. I would also be happy just to have an autolend on with filters, but its been firing blanks in the current allocation regime. I don't think Harmoney is likely to change that, and I don't want to put more idle cash in - as it lowers the overall RoE.

My recoveries also jumped yesterday Cool Bear, but the small numbers render the percentage rise meaningless. Recoveries-to-date are less than 0.25% of default value, so I think BJ1 may have a point about Harmoney's (feeble?) recovery efforts/ debt sale prices system

[joker]

No jump for me. My recoveries are currently sitting at 1.25% of charged off principal.

How is everyone else looking?

Big jump in recoveries in the last week or so.

Charge-offs = 11.6% of gross interest
Recoveries = 6.6% of charge-offs

I haven't invested for over 2 months and am winding down my loan book with Harmoney completely due to the lack of loans, the poor quality of many borrowers, the questionable loan details that Harmoney provides and the time and effort necessary to find loans and vet them for investing. The returns are not worth the effort.

[RMJH]

I suspect harmoney allocates more to institutions because harmony receive more fees from those loans. Hence why the wholesale RAR is lowest. Would retail investors accept a greater share of the loans in exchange for higher fees?
I would accept higher fees if it meant less cash sitting idle. I bet the wholesale investors don't have over 10% of their investment sitting as cash.
It's a bit of a Catch 22 situation because if you withdraw the cash you end up with no autolends. Manual lending is virtually impossible now.
I think it may be time for a simple queue system like at Zopa. First in first out. But no picking other than broad risk bands.

[myles]

I would suggest caution on accepting a reduced rate (via increased fees, reduced rates etc) within the Harmoney lending model (does not apply to others). The risks are higher with Harmoney. These are unsecured loans (that is why the default rates are high)! If there is an upward shift in interest rates or some other significant shift/shock to the economy the effect will be felt here more than elsewhere. That is why the rates are higher here - the risk is higher. If fees increase or rates reduce, alternative investment options would likely be a better choice.

As an example: The difference between wholesale and retail is currently a little over 3%, take that 3% away from the returned interest rate of A grade loans and then compare that to a fully secured term deposit

Be careful what you wish for...

[Aaron]

Has anyone used Southern Cross Loans & Investments?

6.25%-8% Short Term Property lending with first mortgage over the property. Sounds good but there must be a catch. I assume it is the ability of the borrowers to repay but how could that be a problem if you have a first mortgage?

Southern Cross take a 2.5% margin which equates to 8.75 to 10% for the borrowers.


This may have been discussed earlier in the thread but it is a long thread.

[Cool Bear]

......

Be careful what you wish for...
YES..
Myles, that is exactly what happen a couple of years ago.

Initially, HM fees were just 1.25% of all repayments (principal and interest). As that also applies to early repayment, many here complain about it being unfair as HM takes the 1.25% of the total loan even when the borrower pays back after just a month or two. Some here asked for fees as a fixed percentage of gross interest instead. I was okay with the charges then as even with early repayments, the fees works out to just about 5 to 8% of gross interest.

Their wish came true and HM changed the fees calculation to the present very high 15 to 20% of gross interest.

[beacon]

I would suggest caution on accepting a reduced rate (via increased fees, reduced rates etc) within the Harmoney lending model (does not apply to others). The risks are higher with Harmoney. These are unsecured loans (that is why the default rates are high)! If there is an upward shift in interest rates or some other significant shift/shock to the economy the effect will be felt here more than elsewhere. That is why the rates are higher here - the risk is higher. If fees increase or rates reduce, alternative investment options would likely be a better choice....

Point taken, Myles, but I'm already having to look for alternative investment options. With such a choke in loan volume, I've recently withdrawn yet another 10% of my total capital with Harmoney.

[beacon]

Has anyone used Southern Cross Loans & Investments?

6.25%-8% Short Term Property lending with first mortgage over the property. Sounds good but there must be a catch. I assume it is the ability of the borrowers to repay but how could that be a problem if you have a first mortgage?

Southern Cross take a 2.5% margin which equates to 8.75 to 10% for the borrowers.


This may have been discussed earlier in the thread but it is a long thread.

Checked a few times. Never saw a loan over 7.2% pa. Website had no place to place orders. Messages left on phone number were rarely returned. So, looked no further...

[myles]

Has anyone used Southern Cross Loans & Investments?

My memory is a bit vague on this, but I thought they originally had something like a $100,000 buy in? I could be wrong on that.

Now listing a minimum $10,000 investment - so that may still be an issue for some.

[Aaron]

Checked a few times. Never saw a loan over 7.2% pa. Website had no place to place orders. Messages left on phone number were rarely returned. So, looked no further...

Thanks for that 7.2% with a first mortgage as security doesn't sound too bad.
And thanks Myles, still looking like a good option, I may look a bit closer.

[RMJH]

I would suggest caution on accepting a reduced rate (via increased fees, reduced rates etc) within the Harmoney lending model (does not apply to others). The risks are higher with Harmoney. These are unsecured loans (that is why the default rates are high)! If there is an upward shift in interest rates or some other significant shift/shock to the economy the effect will be felt here more than elsewhere. That is why the rates are higher here - the risk is higher. If fees increase or rates reduce, alternative investment options would likely be a better choice.

As an example: The difference between wholesale and retail is currently a little over 3%, take that 3% away from the returned interest rate of A grade loans and then compare that to a fully secured term deposit

Be careful what you wish for...
I get all that and don't touch anything below A5 or above D5. But with 10% cash being the minimum to get any loans you may as well accept slightly higher fees and have all your money invested. It may also help maintain diversification and grow a portfolio.

[beacon]

The Financial Markets Authority is removing the expiry dates for all licences issued under the Financial Markets Conduct Act in a process it expects to be complete by mid-2019. Open-ended terms will apply to all new and existing licences, unless an expiry date is specified on a case by case basis. Current licence holders won't have to apply to be relicensed before the expiry date of their licence. The FMA initially imposed a 5-year term on all licences but has revisited this approach following the development of its risk monitoring framework. A notice of variation has been sent to all licence holders, with the FMA saying it doesn't believe the costs associated with re-licensing would be matched by the benefits gained.

[myles]

But with 10% cash being the minimum to get any loans you may as well accept slightly higher fees and have all your money invested. It may also help maintain diversification and grow a portfolio.

I only manually invest and have now (last week or so) started to move forward i.e. reducing available cash - taking $200 - $250 per loan (no doubt taking $'s from others...). Personally I would stop investing in Harmoney if average interest rates dropped by around 2 or more percent - there are other lower interest but much lower risk options that I would prefer at that rate/risk level - the time factor required for Harmoney investing is also a major detractor - but that's just me.

[alistar_mid]

Its weird when you look at your RAR and it says ~12% something, but then when you update your monthly portfolio spreadsheet your Harmoney account has a net increase of $100 on a balance of ~$50k, which annualized is a about 2.4% :t_down:

[Bjauck]

Its weird when you look at your RAR and it says ~12% something, but then when you update your monthly portfolio spreadsheet your Harmoney account has a net increase of $100 on a balance of ~$50k, which annualized is a about 2.4% :t_down: When you take into account your balance earning no interest and capital charge-offs which are not tax deductible (retail investor DYOR), your actual post tax return on the amount you have on the platform is somewhat reduced.

[CageyB]

No jump for me. My recoveries are currently sitting at 1.25% of charged off principal.

How is everyone else looking?

I'm at 4.9% recoveries/charged off.

[Cool Bear]

I'm at 4.9% recoveries/charged off.
Mine is at about 2.7%. It will all depend on the grade of loans we take. I think a written off A loan would have better chance of recovery than an F loan.

Having said that I do not think HM is that active in recovery and a big portion of my "recoveries" is probably from them selling off the bad loans.

[SteveG]

10394Ive been watching it wind down all day today but now "0 loans in 24 hours"

[Vagabond47]

10394Ive been watching it wind down all day today but now "0 loans in 24 hours"

Loan application qualtiy must have improved.. not a single ****ty loan to load off to retail investors.

[alundracloud]

Hopefully this morning is representative of the retail marketplace going forward..

10399

[myles]

10400
No words...

[leesal]

Fantastic :)

Invested more in 15 minutes then the whole of February!

[Cool Bear]

Hopefully this morning is representative of the retail marketplace going forward..

10399
bugger, missed that!!

[Vagabond47]

Anybody else's arrears just take a significant step up? Thinking they took a holiday from processing anything from middle of last week and are now catching up on the backlog.

[BJ1]

My arrears started growing a few weeks ago - about the time Harmoney started investing it's own money and, seemingly, marketing redraws to my borrowers. Any significance in extra effort in one direction and an observed phenomenon in another?

[CageyB]

My arrears started growing a few weeks ago - about the time Harmoney started investing it's own money and, seemingly, marketing redraws to my borrowers. Any significance in extra effort in one direction and an observed phenomenon in another?

I have no significant change in amount in arrears between now and a year ago.

[beacon]

Arrears rising for me too, even though my invested capital has reduced by more than a quarter, and I haven't made any changes to compensate for my substantially fallen lending

[myles]

Since the start of this year there have been less than 10 loans (on average) per day available for retail investors (by my reckoning about 7.25 but say 10 for ease of calculating).

If you apply a bit of a rough projection on that number of loans, the maximum amount that can be invested (at $25 per loan) for a year is in the order of [10 / 2 * 365 * 0.66 * 25 - see below assumptions] $30,000. If you take into account that a number of loans are missed due to them disappearing quite quickly these days and individuals availability - say half, that leaves around $15,000 maximum investment for a 12 month period.

Not really much of an investment opportunity at this rate...

Just thinking aloud since things have been so quiet ;)

Assumptions:
* Taking 1 loan in 2 to match selection criteria (large variation in this number)
* A third of loans paid off per year (probably more, but most seem to agree this is about right)

[beacon]

Not really much of an investment opportunity at this rate...

Not for the peers.

[RMJH]

At this level it's a slow wind-down for those who got in early and a waste of time for new investors. I am trying to ride it out in the hope that listing will increase again but at some point my patience will be exhausted. Shame, I had high hopes for P2P.

[CageyB]

At this level it's a slow wind-down for those who got in early and a waste of time for new investors. I am trying to ride it out in the hope that listing will increase again but at some point my patience will be exhausted. Shame, I had high hopes for P2P.

My uninvested funds are now at 27% of outstanding principal. That's not sustainable, especially as I get only a couple of autolends a week, even at this level.

[beacon]

Former Chairman, Rob Campbell, has finally also divested his interest in Harmoney to Heartland Bank. Hmm....

[CR_111]

How does this possibly constitute responsible lending? 10430

[RMJH]

How does this possibly constitute responsible lending? 10430
Half their income to service the loan and it's a C?!

[CR_111]

Half their income in loan repayments, and they are renting in Auckland.

[Bjauck]

Former Chairman, Rob Campbell, has finally also divested his interest in Harmoney to Heartland Bank. Hmm.... P2P with a large presence from a bank. Institutional “peers” being allotted more of the loans despite demand from retail peers. NZ P2P is helping broaden the product range/asset diversification for the banks and institutions?

[Vagabond47]

Half their income to service the loan and it's a C?!

And how many bad decisions do you have to make to get to your fifties, still be renting, and need $40k of debt consolidation loan.

[BJ1]

Statistics: last month Harmoney refinanced 10.6% of my loan numbers outstanding (34 loans). In February it was 20 and January 17, compared with an average of 10 in the first three months of last year. They told me they were actively marketing for new business but what I have seen is that the effectiveness of marketing has been to transfer loans from my portfolio to someone else's, and from comments on this forum it seems obvious the beneficiary has been Harmoney itself and perhaps other wholesale investors, certainly not other , largish, retail investors.
It's not P2P anymore, and about time Harmoney withdrew its TV advertising.

[Saamee]

Is anyone able to explain on here ( in simplified terminology! ), how the Reporting and Taxation of 'Payment Protect' loans is handled by NZ Tax payers?

[joker]

Is anyone able to explain on here ( in simplified terminology! ), how the Reporting and Taxation of 'Payment Protect' loans is handled by NZ Tax payers?

Payment protect fees are taxable income. But, it is hard to know what income you have received from payment protect fees as Harmoney does not tell us.

No guarantees on accuracy or veracity of the data/formula but here goes.

My process involves a formula from the dashboard report...Deposits - withdrawals + gross interest - minus service/lender fees - RWT - charged off principal + recoveries - funds available - O/S principal + in funding balance = total payment protect fees. Total PP fees - all previous years payment protect fees = current years payment protect fees.

On $50k invested, my last tax year pp fees were $495.48, the current tax year (just ended) only $142.01 as I've been getting out of Harmoney.

Basically the formula works on the basis that the total change in value of your Harmoney A/c less allowance for deposits, withdrawals, income and expenses will leave a surplus/deficit? that must reflect PP fees.

Spread sheet image here...10441

[myles]

Tend not to get involved in tax discussions :p

Not sure how useful this is: https://www.harmoney.co.nz/investors/tax-returns

[alundracloud]

I graphed the the principal value of my account vs. time, to try and visualize the slow-down of my portfolio..

10445

[RMJH]

I graphed the the principal value of my account vs. time, to try and visualize the slow-down of my portfolio..

10445
I think it's time to accept that it's effectively over for P2P retail investment in NZ. Repayments greatly exceed listings, autolend yields so few loans and manual checking is a time waster.

[myles]

10446
Comparative chart - have been able to make a little headway in recent days, but it is a hard slog.

[alundracloud]

10446
Comparative chart - have been able to make a little headway in recent days, but it is a hard slog.

Have you had to loosen up on your investment criteria or increase how many notes you'll buy per loan (or both) to achieve such a result?

[alundracloud]

I was having a play around with some of the data that Harmoney provide on their marketplace statistics, just as a sort of matter of interest, and I figured I'd share here in case you were interested :)

In particular, I was looking at the RAR values provided. At this website: https://app.harmoney.com/api/v1/public/statistics/investor/rar-loan-count is a whole bunch of data that they use to generate one of the graphs. The first thing I did was delete any datapoints that had less than 100 loans, which left me with 4,249 datapoints left. Then I calculated how many customers (and what %) had an RAR of above the values in 'column F'.

e.g. 200 customers out of 4,249 have an RAR of above 15.5%

10448

[myles]

Have you had to loosen up on your investment criteria or increase how many notes you'll buy per loan (or both) to achieve such a result?

No to a change in number of notes - I made that change last year.
Yes to a change in investment criteria - dropped from taking a lowest grade of B5 down to B2.

I'm not sure that change has made all of the difference, but certainly some of it.

[myles]

I was having a play around with some of the data that Harmoney provide on their marketplace statistics, just as a sort of matter of interest, and I figured I'd share here in case you were interested :)

:)

I think you've got to be a bit careful making assumptions from this level of data. Just skimming the actual values, it looks like large investors (i.e. more loans), typically have a significantly higher RAR than those with fewer loans.

Probably because large investors have a better understanding of which are the better loans, and possibly because they are less risk averse.

Smaller investors, possibly more risk averse, selecting lower grade loans - so lower RAR. More of these smaller investors pushing the mean well down from actual?

[RMJH]

10446
Comparative chart - have been able to make a little headway in recent days, but it is a hard slog.
Interesting but I have a bigger portfolio and not enough loans available to replace repayments. I have considered reducing diversification but don't feel comfortable that I could achieve enough quickly enough to grow my portfolio that way. I have also lost a little confidence in Harmoney to be brutally honest.

[myles]

I have also lost a little confidence in Harmoney to be brutally honest.

Agree. Since I started investing with Harmoney I've been 'astounded' at their complete lack of communication with Investors. I think in the early days they did, even had some staff posting here. It really comes down to blind faith, which is now waning for most.

A few 'lender' based posts on their blog, here or even Facebook, would be beneficial:

when/why changes are made
some detail of the current poor loan supply
will poor loan supply continue/improve
future 'planned' changes
anything really


:t_down:

[BJ1]

I think that if someone was able to get into the data it might be found that Harmoney was losing far more than its shareholders wanted, in just running the platform, so the decision was taken to manage that loss by investing in its own right, using BNZ funding, and to heck with the impact on the actual Peers in the P2P concept. If that is so, then our exposures are going to trend to zero, while our arrears will trend higher (as I have noticed in recent months).