Squirrel Money P2P

[icyfire]

Investing with LC and Harmoney has become so time consuming that I am considering withdrawing all my money and investing it all with Squirrel Money.

Harmoney's Auto-Lend lacks some important filters and its priority rules are broken. LC gets very few loans and unless you are watching your phone all day or login countless times throughout the day then it's difficult to invest.

For these reasons I quite like investing with Squirrel Money; deposit some money, create a loan order and then go to the beach. My money is automatically invested when a new loan becomes available. The interest rates are slightly lower but far less time consuming and time is money. And I am also a fan of their Loan Shield.

[Saamee]

Investing with LC and Harmoney has become so time consuming that I am considering withdrawing all my money and investing it all with Squirrel Money.

Harmoney's Auto-Lend lacks some important filters and its priority rules are broken. LC gets very few loans and unless you are watching your phone all day or login countless times throughout the day then it's difficult to invest.

For these reasons I quite like investing with Squirrel Money; deposit some money, create a loan order and then go to the beach. My money is automatically invested when a new loan becomes available. The interest rates are slightly lower but far less time consuming and time is money. And I am also a fan of their Loan Shield.

Yes that's right you find the P2P Options that work best for yourself!

I'm now split approx 50 \ 50 with funding between LC and SM.

I would never advise investing 100% in any one P2P company - got to keep diversified!

[JB@Squirrel]

Maybe the drop(ping) in Reserve Fund size is linked to Squirrels commitment to paying in 4% over the 1st year. Now they will let the fund dwindle down to the 1.9% level they state it should be at?

Hi Saamee, apologies haven't been on here for a while.

We wrote off a $20k loan over Christmas. We expect to collect on this one, but we have a policy of writing off at 90 days arrears and then recovering to the reserve fund. It is sitting with debt collectors and we have security. We also cover arrears through the reserve fund. A combination of this can make it appear a bit more volatile whilst the book isn't that large. What we have been showing is the cash balance in the fund as opposed to the cash balance plus receivables. It has since started to build up again and does so fairly quickly now.

We initially committed to keeping the reserve fund at 4.00% for the first 12 months so that the reserve fund would have a reasonable starting position. We are now through 12 months so it will build up under its own steam. The book has started to grow faster and recently passed $6m 100% retail funded. That growth will drop the reserve fund as a % of loans outstanding.

We launched a new web site in December so the reporting has changed a bit, mostly for the better.

The focus with the new web site has been on getting the borrower proposition simpler. You'll see we now have explicit borrower rates targeting high quality borrowers and we sped up the loan acceptance process to reduce latency for investors.

You'll see we put up the Squirrel Investor App for Android and iOS. Its version 1 and we have plans for v2.0 already. We'll hit you up for feedback on what you want when we're ready for the next App sprint.

We intend to put up a lot more reporting up on the reserve fund soon.

[Saamee]

Hi Saamee, apologies haven't been on here for a while.

We wrote off a $20k loan over Christmas. We expect to collect on this one, but we have a policy of writing off at 90 days arrears and then recovering to the reserve fund. It is sitting with debt collectors and we have security. We also cover arrears through the reserve fund. A combination of this can make it appear a bit more volatile whilst the book isn't that large. What we have been showing is the cash balance in the fund as opposed to the cash balance plus receivables. It has since started to build up again and does so fairly quickly now.

We initially committed to keeping the reserve fund at 4.00% for the first 12 months so that the reserve fund would have a reasonable starting position. We are now through 12 months so it will build up under its own steam. The book has started to grow faster and recently passed $6m 100% retail funded. That growth will drop the reserve fund as a % of loans outstanding.

We launched a new web site in December so the reporting has changed a bit, mostly for the better.

The focus with the new web site has been on getting the borrower proposition simpler. You'll see we now have explicit borrower rates targeting high quality borrowers and we sped up the loan acceptance process to reduce latency for investors.

You'll see we put up the Squirrel Investor App for Android and iOS. Its version 1 and we have plans for v2.0 already. We'll hit you up for feedback on what you want when we're ready for the next App sprint.

We intend to put up a lot more reporting up on the reserve fund soon.

Hey JB

Thanks for the confirmation \ update. I recently got the App installed too.

Would be good to hear from you where you think P2P will be going in NZ over 2017 and also for sure how you think P2P may play out with Domestic & International Borrowing Interest rates moving now upwards slowly. ( either on here or via a Newsletter to Investors.

Rgds Saamee

[JB@Squirrel]

Hey guys,

Quick update.

We currently have $200,000 of loans available on the platform. $52k in the secondary market (loans we've settled on our account and now for sale), $97k in documentation and $50k documented and awaiting funding.

5 year at 9.00%
3 year at 8.50%

The stuff we have on the secondary market is a mix of $2k and $5k loans. Historically we used to do these at $5k but are dropped to $2k last week and now to $500 going forward to match the minimum investment amount.

Few key points to reminder you all:

- Even 5 year loans prepay at about 30% per year (nature of market.) . Average duration is around 18 months.
- Secondary market if you need to liquidate. (Saame - I don't see rates going up any time soon.)
- Can auto-invest and can also set up a regular withdrawal for income.
- Mobile App (iOS and Android)

[unhuman]

I like the change made to buying into the secondary market at 500 amounts. Gives confidence that it will be easy to sell out of my investments if needed.

Continuing happy investor.

[Kelvin]

Squirrel shareholder update says they are looking to reach a $30m loan book for the platform to break even.

A long way to go from the current $6m loans and with investors not keeping up with borrower activity recently

[icyfire]

Squirrel shareholder update says they are looking to reach a $30m loan book for the platform to break even.

A long way to go from the current $6m loans and with investors not keeping up with borrower activity recently

Growing organically takes time and perhaps they need to invest a bit more into marketing the platform. I personally prefer to invest into SM nowadays. Slightly lower returns but much less time consuming and much safer investment.

[lawson]

I have been very happy with my little sojourn into Squirrel Money so far but because I don't know how to estimate the risk I have limited the funds I have invested to date. I am thinking of increasing it tho and wondered if anyone else could venture an opinion on how you personally view the risk profile? I know Icyfire has indicated above that SM is a much safer investment than other P2P lenders but just how safe over 3 to 5 years do you think the investments are? Especially given the 4% reserve was only for year 1. I'm doing the indecision dance at present. Thanks in advance for any thoughts and apologies for the uninformed question I'm a novice investor.

[icyfire]

I have been very happy with my little sojourn into Squirrel Money so far but because I don't know how to estimate the risk I have limited the funds I have invested to date. I am thinking of increasing it tho and wondered if anyone else could venture an opinion on how you personally view the risk profile? I know Icyfire has indicated above that SM is a much safer investment than other P2P lenders but just how safe over 3 to 5 years do you think the investments are? Especially given the 4% reserve was only for year 1. I'm doing the indecision dance at present. Thanks in advance for any thoughts and apologies for the uninformed question I'm a novice investor.
Have a look at "What happens if the Reserve Fund runs out? (https://www.squirrelmoney.co.nz/looking-after-your-money)"

[JB@Squirrel]

Hey Icyfire

Squirrel Money is primarily a banking technology play. We have built a platform that can do secured and unsecured lending, term deposits and call accounts. We put in a secondary market, an App, auto-invest etc. I think we are innovating faster than the rest of the market. The entire platform has a value under $500k on the books so we haven't even over capitalised. (We've slowed development a bit as we are currently build an epic mortgage platform for our broker business.)

We only need 3 people to run the entire platform and even that has spare capacity. If we were to simply look at marginal operating costs (excluding marketing) we are profitable already at $7m of FUM. $30m is the level that it truly washes its face including marketing and share of company overheads. Contrast that with Harmoney that has lost over $22m and has high operating expenses.

We are pursuing very different strategies.

My view is that the economics of P2P are rightfully tight. We need to build a sustainable and economically viable long-term proposition and we need to be lean.

In terms of income we earn a 2% margin and some fee income. Personal loans repay quickly with a run-off rate of close to 30% per year. So the margin income is about $700 over the life of a loan plus an upfront fee of $250 for us. So lifetime value of $950 maybe more if they borrow again and again. That's not a lot to play with in our space and we'll always find ourselves outbid in traditional media. Compare this with a finance company that earns 10% margins and has a lifetime value of $3,500. We cannot afford to spend big $$ of advertising especially with loans that run-off at 30%.

The challenge with having a $300m personal loan book is that you need to write about $90m a year just to stand still. That creates a bit of a noose - if we spend lots on marketing we have to keep spending lots on marketing to maintain momentum.

As it stands we charge borrowers an establishment fee of $250 for unsecured loans versus Harmoney at $500. Our borrower rates on average are about 4% lower which will be partially a reflection of lower risk borrowers and partly that we want to offer consistently better pricing. We think borrowers with good credit are better-off on our platform and its sustainable. We don't have lots of budget to push that message but we figure word will gradually get out and we're happy to wait, learn and build momentum.

Cheers, JB

[JB@Squirrel]

Hey Lawson,

Whilst the market is small our Reserve Fund will be a bit volatile that's why we seeded it with $200k to start with (of our own money.)

At a marginal level we still provision at 1.5 times expected losses so it should gradually increase albeit as a % it will drop.

The key thing is that if the reserve fund runs out we can socialise the loss across all investors by shaving their interest rate to replenish the fund. So if the fund has 3% actual cash in it (plus we put in 2% per year) then we have 5% reserves available over a year. If losses ran up to 10% then we would shave investor returns by 5%. In this scenario capital is still protected but returns would drop from 8%-9% to 3%-4%. Socialisation provides the maximum diversification benefit as it's sort of like an insurance policy shared across the investors.

We could debate whether 10% is realistic. My view is it is an extremely high loss rate for good quality credit borrowers. Read the investor booklet for details on all of this.

We essentially run the same reserve fund model as RateSetter and Zopa in the UK. Neither of these guys have lost 1 penny under this model even post GFC. To date (and accept its still early) we have not missed one repayment to investors, not even by a day.

Cheers, JB

[lawson]

Thanks for the info JB@Squirrel and icyfyre.

[RGR367]

It's been a dry 2 week on the lending front. My funds still sitting waiting for borrowers (on 2,3 or 5 year loans). What about the others on the other P2P platforms? Haven't you noticed a slowdown of intake on your funds?

[Saamee]

It's been a dry 2 week on the lending front. My funds still sitting waiting for borrowers (on 2,3 or 5 year loans). What about the others on the other P2P platforms? Haven't you noticed a slowdown of intake on your funds?

@Squirrel - Yes the pendulum has swung to many Investors and not enough Borrowers

@Lending Crowd last was was a massive week with many Large loans - waiting to see about this week!

[icyfire]

It appears that currently all NZ based P2P platforms are facing the same problem where there are too many investors and not enough borrowers.

[Investor]

It appears that currently all NZ based P2P platforms are facing the same problem where there are too many investors and not enough borrowers.

Yeah

:(

[Kelvin]

And Squirrel looking to attract more investors, being part of this Wealth Innovation Tour https://gallery.mailchimp.com/764481672dba76d589586c389/files/d1bb7b60-7328-467e-865a-9ac9fe0f9352/A4_poster_web.pdf

Hope they invest just as much effort on the borrower side

[CageyB]

I opened a SquirrelMoney account a couple of weeks ago to test the waters (as Harmoney is a dry well right now), and nothing has gone through. I see that it seems to be having the same issue as Harmoney. What's the general strategy as far as choosing an interest rate for your bid? I've been bidding on on the lower end of the distribution. If a loan is approved that's larger than the available funds at any given interest rate, do they simply combine the funds so the investor gets the rate they bid at and the borrower pays a weighted average rate?

[Bjauck]

I opened a SquirrelMoney account a couple of weeks ago to test the waters (as Harmoney is a dry well right now), and nothing has gone through. I see that it seems to be having the same issue as Harmoney. What's the general strategy as far as choosing an interest rate for your bid? I've been bidding on on the lower end of the distribution. If a loan is approved that's larger than the available funds at any given interest rate, do they simply combine the funds so the investor gets the rate they bid at and the borrower pays a weighted average rate? I think what happens is: if the borrower wants $10,000 and lenders have bids for $5,000 at 8.9% and $5,000 at 9.0%, then all lenders receive 9.0%

[Saamee]

Swung back today > Borrowers this afternoon now waiting for Investors Funds!!


8767

[icyfire]

Swung back today > Borrowers this afternoon now waiting for Investors Funds!!great news, in that case I'd better deposit some more money

[Saamee]

Just noticed the Reserve Fund has fallen under 3% now at 2.92% - 1st time i have sighted it below that level.

Although their Loan book is now over $7.1M they must have Written off quite a few Loans at the end of the Month \ Financial Year....

8782

[Bjauck]

I don't fully understand how it operates. It has been operating for more than a year now, so I don't think Squirrel is obliged to keep the reserve fund at 4%. Perhaps it is naturally decreasing to a lower % without write-offs?

[Saamee]

I don't fully understand how it operates. It has been operating for more than a year now, so I don't think Squirrel is obliged to keep the reserve fund at 4%. Perhaps it is naturally decreasing to a lower % without write-offs?

Yes your right now it is floating and will move downwards more. It did take a large drop over the Weekend.

[icyfire]

I think that it's been hovering around the 208-209k mark for a few months.
On their website it says (https://www.squirrelmoney.co.nz/looking-after-your-money): "What happens if the Reserve Fund runs out?Our expected loss rate on the existing loan book is 1.3%, however we are currently reserving at 1.9% which provides 1.5x coverage over the expected loss rate each year."

[Investor]

I don't fully understand how it operates. It has been operating for more than a year now, so I don't think Squirrel is obliged to keep the reserve fund at 4%. Perhaps it is naturally decreasing to a lower % without write-offs?

Squirrel decides what percentage of loan income is allocated into the fund, currently 1.9%. Correct, they have no obligation in terms of the fund's balance. They chose to start it off with $200k of their own funds and now periodically decide what % of loan income to allocate to it based on predicted losses.

[baldricknz]

Does the current reserve fund of $208k still include the $200k from Squirrel? If it does, wouldn't this indicate that the expected loss rate is actually closer to 2% (not 1.17%) if the reserve levy is currently 1.94%?

[mfd]

Does the current reserve fund of $208k still include the $200k from Squirrel? If it does, wouldn't this indicate that the expected loss rate is actually closer to 2% (not 1.17%) if the reserve levy is currently 1.94%?

The site suggests a 2016 bad debt rate of 0.6% (0% for 2017, I think it's the bad debt on loans issued in that year). If I understand it correctly, the loan book will grow quicker than the reserve fund (when a loan is made it immediately adds to the book but only dribbles into the reserve fund as payments are made), so it's not surprising to see the coverage ratio dropping as the loan book grows, now that Squirrel don't have to keep it topped up.

https://www.squirrelmoney.co.nz/platform-statistics/

[Saamee]

Does the current reserve fund of $208k still include the $200k from Squirrel? If it does, wouldn't this indicate that the expected loss rate is actually closer to 2% (not 1.17%) if the reserve levy is currently 1.94%?

Yes it does. As the loan book grows the Reserve Fund Levy will decrease accordingly. Plus it will get depleted quicker as and when Loans are Written Off.

I get uncomfortable seeing the Reserve Fund getting lower and lower - felt happier when it was sitting @ 4% over the 1st year of their trading...

[Saamee]

Anyone else viewing a portion of their SM investment like Term Deposit?

With the SM Secondary market you now have choices....

1) $$'s in a main street bank on a TD @ maybe 2.05% / Year for a month

or

2) $$'s in SM @ 9% / Year per month.... with a $50 break fee if required??


Just thinking.....

[unhuman]

I don't think of them as substitutes but SM is the only cash hold that I am increasing.

[icyfire]

That's exactly what I've been doing. As my bank term deposits have matured I then invested the money in SM. The ROI is much better than what the banks are currently offering.

[baldricknz]

Yep have been doing the same regarding term deposits and SM. Into 6 figures now, not sure how wise it is though considering such a large % of loans are unsecured. My preference is for LC but the number of loans coming through is low.

[icyfire]

I invest in both LC and SM. LC has loans secured against a vehicle and sometimes property while SM has the Loan Shield. Hopefully all borrowers on LC using their vehicle as security have insurance on that vehicle. I'm hoping also that LC take into account the fast depreciating value of a vehicle when calculating a borrower's risk grade.

[Saamee]

Yep have been doing the same regarding term deposits and SM. Into 6 figures now, not sure how wise it is though considering such a large % of loans are unsecured. My preference is for LC but the number of loans coming through is low.

Yes... Same Same. The wisdom is yet to be seen! That's why I mentioned a few posts above on the SM thread that I raise my eyebrows when I see the value of the Loan Shield going DOWN. It's exactly THAT feeling of security diminishing.

[icyfire]

Only time will tell how wise of a decision it was. Loosing $25 or $50 in a loan is not the same feeling as loosing $500, however, I have full confidence in the SM team and their system.
Btw, the Reserve Fund balance is back up to almost $211k

[Kelvin]

8790
Hahaha, Enquiries for 5 year loans are at over $1m. Still takes a few days for this to translate into loans being funded though.

[icyfire]

8790
Hahaha, Enquiries for 5 year loans are at over $1m. Still takes a few days for this to translate into loans being funded though.
Where is the $1m come from?

[Kelvin]

Where is the $1m come from?

In the Potential borrowers column. Seems like they can only display up to 6 digits.

[Saamee]

In the Potential borrowers column. Seems like they can only display up to 6 digits.

Yes noticed that tick over too - Could be swamped with new Borrowers wanting our $$$'s very soon.....

[RGR367]

Yes noticed that tick over too - Could be swamped with new Borrowers wanting our $$$'s very soon.....

Happening now as one of my lots got taken today on 2 yr term.

[baldricknz]

Anyone else go to the wealth seminars such as the one last night at the old Albany Town hall? Was interesting to hear directly from Squirrel and Simplicity kiwi saver.. can't remember much about the 3rd presenter. Might be worth checking out Simplicity due to lowest fees of about a third of a normal kiwisaver provider. They have only been running for 7 months with 5k members and $110million invested (through Vanguard).

[Saamee]

In the Potential borrowers column. Seems like they can only display up to 6 digits.

See SM have now upgraded that to 7 numbers :)

How long before they need 8 digits?? !!

[icyfire]

Happening now as one of my lots got taken today on 2 yr term.
Already invested in the non-Kiwisaver Simplicity Investment Funds (https://simplicityfunds.kiwi/)

[Entrep]

I have about $50K to initially invest in the P2P lending space. From reading the threads here many people agree that LC is more secure than Harmoney (all loans have either vehicle or house as security) so I am starting off with LC. I also know about the SquirrelMoney LoanShield and most people seem to say that is "most secure"? I will probably try both LC and SM and avoid Harmoney.

My biggest question is how much out of the $50K would you recommend I invest into each loan? Obviously diversification is better, but I also don't want money sitting there doing nothing while I wait for loans to come in. From what I gather it could take a while for all the $50K to be invested. In the Harmoney thread people are investing from $100 to $400 into each loan but it looks like that would take months to be fully invested on the other 2 platforms.

Also many here seem to say that they ignore the A loans on LC (eg the current loan L00-13-072 at 8.95% which I see has been available for a day or so now (seemingly much more time that other loans) and for that interest rate, would prefer SM) - is that correct? It sounds like Bs are the sweet spot on LC?

Thanks everyone

[JB@Squirrel]

From what I gather it could take a while for all the $50K to be invested. In the Harmoney thread people are investing from $100 to $400 into each loan but it looks like that would take months to be fully invested on the other 2 platforms.

Also many here seem to say that they ignore the A loans on LC (eg the current loan L00-13-072 at 8.95% which I see has been available for a day or so now (seemingly much more time that other loans) and for that interest rate, would prefer SM) - is that correct? It sounds like Bs are the sweet spot on LC?

Thanks everyone

Hi Entrep, with the SM platform you can just invest it in a lump sum as the reserve fund (loan shield) provides the full diversification benefit. No need to spread it over loans and you can't choose loans anyway. We currently have $50k available right now, so you'd be able to invest it in a day. Or you could put it in progressively in amounts of $10k and kust see how it goes.

There is about $1m going through the platform per month now and we have no institutional investors or banks, just retail investors so you wont get crowded out.

[Entrep]

Hi Entrep, with the SM platform you can just invest it in a lump sum as the reserve fund (loan shield) provides the full diversification benefit. No need to spread it over loans and you can't choose loans anyway. We currently have $50k available right now, so you'd be able to invest it in a day. Or you could put it in progressively in amounts of $10k and kust see how it goes.

There is about $1m going through the platform per month now and we have no institutional investors or banks, just retail investors so you wont get crowded out.

Thanks, when you say "the reserve fund (loan shield) provides the full diversification benefit" you mean by way of socialising losses from any loans right? But strictly speaking, my lump sum would not be diversified as it would be all lumped into one big loan, and I would have to rely 100% on loan shield versus a more thorough loan diversification strategy of investing in several loans (plus have Loan Shield on all of them obviously).

What do you mean you can't choose loans? That I can't see specifics of loans? I believe I could still choose/diversify by creating 5 x $10K orders for example?

I have uploaded all the docs and am waiting for verification BTW.

[Saamee]

Thanks, when you say "the reserve fund (loan shield) provides the full diversification benefit" you mean by way of socialising losses from any loans right? But strictly speaking, my lump sum would not be diversified as it would be all lumped into one big loan, and I would have to rely 100% on loan shield versus a more thorough loan diversification strategy of investing in several loans (plus have Loan Shield on all of them obviously).

What do you mean you can't choose loans? That I can't see specifics of loans? I believe I could still choose/diversify by creating 5 x $10K orders for example?

I have uploaded all the docs and am waiting for verification BTW.

@ entrep >> When you invest in SM you have no control over how your lending funding is invested.

So say your 10K lump sum may go in 20 x $500 individual customer loans or make up just a part of a 1 x 50K loan to just one customer.

[Entrep]

When you invest in SM you have no control over how your lending funding is invested.

So say your 10K lump sum may go in 20 x $500 individual customer loans or make up just a part of a 1 x 50K loan to just one customer.

Thanks I see now. So if I have $50K to invest then I should just create an investment order for that amount with the particulars (length and interest rate) that I want and that's it? Then I just wait for the loans to be taken out and my money to start working?

[Saamee]

Thanks I see now. So if I have $50K to invest then I should just create an investment order for that amount with the particulars (length and interest rate) that I want and that's it? Then I just wait for the loans to be taken out and my money to start working?

Exactly :)

[Kelvin]

I personally like to invest in $500 chunks. If I need to sell my loans, I can do so $500 at a time as opposed to pulling out a whole $50k. Also if i get an early repayment, it's easier to reinvest $500 than it is to reinvest $50k

[Saamee]

I personally like to invest in $500 chunks. If I need to sell my loans, I can do so $500 at a time as opposed to pulling out a whole $50k. Also if i get an early repayment, it's easier to reinvest $500 than it is to reinvest $50k

Yes... I'm somewhere in between :) There are always early repayments coming ( which is good = choices ) however I viewed the SM $50 ( or 1% ) Fee charged and decided to invest in larger loan parcels ( 20K to 25K ). For me this meant if I need to buy a new car - sell the 1 x loan and break fee is just 0.0025%....

Just comes down to personal choices.....

[Saamee]

Thanks I see now. So if I have $50K to invest then I should just create an investment order for that amount with the particulars (length and interest rate) that I want and that's it? Then I just wait for the loans to be taken out and my money to start working?

You can expect somewhere between 20% to 50% of your Loans being early repaid every year - It varies from one lender to another with Harmoney being the highest @ 50% and LC @ 30%. ( my own figures )

[Saamee]

Thanks, when you say "the reserve fund (loan shield) provides the full diversification benefit" you mean by way of socialising losses from any loans right? But strictly speaking, my lump sum would not be diversified as it would be all lumped into one big loan, and I would have to rely 100% on loan shield versus a more thorough loan diversification strategy of investing in several loans (plus have Loan Shield on all of them obviously).

What do you mean you can't choose loans? That I can't see specifics of loans? I believe I could still choose/diversify by creating 5 x $10K orders for example?

I have uploaded all the docs and am waiting for verification BTW.

This SM website is worth checking in with everyday!! Loan Shield Value

>> https://www.squirrelmoney.co.nz/looking-after-your-money/ <<

[Entrep]

How long does it generally take for loans to get filled? I have a $5K order in at one step below the other "bids" presently. Also, are all the loans generally 5 years? 2 and 3 years seem pretty dead.

[Saamee]

How long does it generally take for loans to get filled? I have a $5K order in at one step below the other "bids" presently. Also, are all the loans generally 5 years? 2 and 3 years seem pretty dead.

On a typical day would be filled same day.....

Is today a typical day? :)

[Entrep]

Thanks, and are most loans in the 5 year range?

[Kelvin]

Thanks, and are most loans in the 5 year range?

Yes, most are

[Entrep]

Thanks, their platform seems pretty dead to me.

[Saamee]

Thanks, their platform seems pretty dead to me.

By "Dead".... are you meaning quiet with not many borrowers this week?

I have checked in every day and it does seem to have been a very quiet towards the end of this week - like yesterday I saw just 3.5K awaiting funding.

[Saamee]

On a typical day would be filled same day.....

Is today a typical day? :)

Just perhaps this week was NOT a typical week in the end!!!

[Entrep]

By "Dead".... are you meaning quiet with not many borrowers this week?

I have checked in every day and it does seem to have been a very quiet towards the end of this week - like yesterday I saw just 3.5K awaiting funding.

Yup that's right

[icyfire]

There are 7 new loans ($150k) coming to market soon

[Entrep]

There are 7 new loans ($150k) coming to market soon

ANy non-5-year ones?

[beacon]

SM $50 ( or 1% ) Fee charged and decided to invest in larger loan parcels ( 20K to 25K ). For me this meant if I need to buy a new car - sell the 1 x loan and break fee is just 0.0025%....

0.0025%? You mean $50 max/25000 = Break fee 0.2% for you on your 25k parcels vs 1% for Kelvin on his $500 parcels

[Saamee]

Is anyone Actively getting into any loans currently at Squirrel?

I've been watching for 3 weeks now and Loans available always show ZERO for any term length!

I also see the Investors Funds for 5 Year loans @ 9% grow and grow till it's now at 123K

Are my observations correct and things have ground to a sudden halt @ SM??

[Entrep]

I had managed to get around $7K put to work early last week but don't really understand the platform mechanics. I think I bought someone else's loans and was able to skip the queue by "matching them".

Their overnight account credit is killing them too, it is pointless to add money and then have it sit there doing nothing for weeks for anything come up. Nor do they have email notification of loans coming on market or requiring matching. Investors have very little knowledge about timeframes with them.

With LC funding is credited near instantly and with their notification emails I can invest in loans instantly too. Such simple things.

[Saamee]

I had managed to get around $7K put to work early last week but don't really understand the platform mechanics. I think I bought someone else's loans and was able to skip the queue by "matching them".

Their overnight account credit is killing them too, it is pointless to add money and then have it sit there doing nothing for weeks for anything come up. Nor do they have email notification of loans coming on market or requiring matching. Investors have very little knowledge about timeframes with them.

With LC funding is credited near instantly and with their notification emails I can invest in loans instantly too. Such simple things.

Yes, the secondary market is a good way of getting in quick if loans are available.

I have no issue buying them, just like a new loan, and at this stage, only with a few months missing off the original 60 month term. I only go for the 9%!

[RGR367]

Only 1 out of 4 investment orders (for 3 yrs) that I put in 2 weeks ago has been taken. As far as we can see, there are no loans there right now needing financing. All we can do is wait really.

[Kelvin]

Just check the potential and qualified borrower amounts, as well as other investor bids.

Then you can decide whether to deposit more funds, hold your current level of investments, or withdraw funds

[Saamee]

Just check the potential and qualified borrower amounts, as well as other investor bids.

Then you can decide whether to deposit more funds, hold your current level of investments, or withdraw funds

With 156K of Investor funds waiting for 5 Year loans..... and only 41K of Qualified Borrowers.... It gonna take a wee while for folks to get Invested!!

8890

[icyfire]

There's $130k of Qualified Borrowers. I personally always create an Investment Order for each term.
It takes me about the same time to invest $500 in SM as does in LC (unless you are in front of the computer 24/7 which I'm not).

8891

[Kelvin]

Just got a loan at 8.95%. I put in a lower bid at 8.85%

still almost $150k of bids for 5 years, so not adding any further funds

[Saamee]

Just got a loan at 8.95%. I put in a lower bid at 8.85%

still almost $150k of bids for 5 years, so not adding any further funds

I'm sure you've done the numbers :) On 100K invested a .05% Less interest rate per year only equates to $50 less interest earned per year ( and then still minus Tax as well )

So good plan to go lower and get in!

[Kelvin]

I'm sure you've done the numbers :) On 100K invested a .05% Less interest rate per year only equates to $50 less interest earned per year ( and then still minus Tax as well )

So good plan to go lower and get in!

Taking the lower rate to get your funds invested quicker may even be more profitable - compared to having your funds sitting idle waiting days for investment

[Saamee]

As of 1.00pm today there are 172K of Investors funds waiting for 5 Year loans @9%!

[icyfire]

As of 1.00pm today there are 172K of Investors funds waiting for 5 Year loans @9%!With over $1m of Potential Borrowers I think that SM are doing a great job of screening the borrowers and not loaning to every "Tom, Dick and Harry" out there

[Saamee]

With over $1m of Potential Borrowers I think that SM are doing a great job of screening the borrowers and not loaning to every "Tom, Dick and Harry" out there

Yes, agreed. It's just currently a trifle out of balance.

[Saamee]

OK the penny has just dropped....

Now with 218K of investor funds sitting waiting on 5 year terms - I've never see this much before.

It must be following their recent Road Show around NZ and the success that it has created with new Investors.

Literally they have been Flooded with New Money.

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[Kelvin]

Still got into a loan at 8.95% this morning

[RGR367]

Still got into a loan at 8.95% this morning

I'm thinking of cancelling my auto-bids this week when 2 of my orders were taken in just now for 3 yrs. Those were at least 3 weeks of waiting.

[icyfire]

Potential Borrowers are now over $1.5m which is the highest I've seen it. It's great to see.
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[Saamee]

Good to see the 'looong' queue of 5YR term Investors has whittled away over the last week or so.

Put some $$'s in Thursday and they got matched up Friday day time ( back to normal maybe now! ? )

[icyfire]

There is $42,000 Awaiting Funding over at Squirrel Money
9056

[RGR367]

There is $42,000 Awaiting Funding over at Squirrel Money
9056

Yeah, unfortunately I only want to lend on a 2 yr term :mad ;: as I got too much out already on those 3 and 5 yr terms. Hoping I don't move out of my comfort zone for this one.

[joker]

I see that borrowers with lower credit ratings can pay 16.95% to 17.95% interest on Squirrel. Has anyone out there invested in a loan and received a higher rate than 9%?

[Saamee]

I see that borrowers with lower credit ratings can pay 16.95% to 17.95% interest on Squirrel. Has anyone out there invested in a loan and received a higher rate than 9%?

@emerald > No. Never seen a % rate greater than 9% as a Lender @ SM..

[RGR367]

I see that borrowers with lower credit ratings can pay 16.95% to 17.95% interest on Squirrel. Has anyone out there invested in a loan and received a higher rate than 9%?

I asked SM before if I can choose or offer a loan more than 9% and the reply was "9% was the top that they give to the Market".

[Saamee]

The SM Reserve Fund dropped by 33K overnight!

Coverage Ratio also dropped from 2.49% to 2.1%

A rather large Write Off!

9067 9068

[Bjauck]

The SM Reserve Fund dropped by 33K overnight!

Coverage Ratio also dropped from 2.49% to 2.1%

A rather large Write Off!

9067 9068 I get a response of invalid attachment when I click on the links.

If SM decide to increase the contribution rate to the Reserve Fund, would that come out of the interest paid to investors? Would it apply to existing investments or just to future investments?

[icyfire]

The SM Reserve Fund dropped by 33K overnight!

Coverage Ratio also dropped from 2.49% to 2.1%

A rather large Write Off!

9067 9068
The Reserve Fund has been this low before and it will not take long to build up again. I'm just happy to have a fund to cover the loan defaults. SM's Reserve Fund is much better even than LC's vehicle security which might only cover half of the loan value.

[Entrep]

Woah that is a big write off. Wonder if it was one loan or many?

[Saamee]

The SM Reserve Fund dropped by 33K overnight!

Coverage Ratio also dropped from 2.49% to 2.1%

A rather large Write Off!

9071 9072






Strange I could see them OK - Uploaded again :)

[JB@Squirrel]

I see that borrowers with lower credit ratings can pay 16.95% to 17.95% interest on Squirrel. Has anyone out there invested in a loan and received a higher rate than 9%?

Hey Emerald,

The way the platform works is that we pay investors a set maximum rate by term (that we can change depending on supply and demand) but which we haven't moved since soon after launch. So for 5 years that is 9.00%. Investors can bid below that level to get their money invested faster.

With an unsecured 5 year E grade loan at 16.95% the difference is the risk premium which is paid into the reserve fund which then takes the credit risk. As such your return doesn't change depending on risk grade. In the event the reserve fund was depleted then we can haircut investor interest to replenish it thus socialising the loss by reducing investor returns. This maximises diversification but keeps investing simple.

Cheers, JB

[JB@Squirrel]

Yeah, unfortunately I only want to lend on a 2 yr term :mad ;: as I got too much out already on those 3 and 5 yr terms. Hoping I don't move out of my comfort zone for this one.

Hey RGR,

Remember that consumer finance loans typically pay back way faster than term. You also have the secondary market so can sell your loans at any point of time. To date 5 year loans have sold very quickly especially when at close to 9.00% due to strong investor demand.

Cheers, JB

[JB@Squirrel]

The SM Reserve Fund dropped by 33K overnight!

Coverage Ratio also dropped from 2.49% to 2.1%

A rather large Write Off!

9067 9068

You guys are fast! It was one loan of $33,000 secured over a house where his business has gone under and took the house out too! It was a C grade. It had been in arrears for a while so good to write it off. We'll still look to recover what we can.

In the early days we're going to have swings like this, but they'll decrease and the reserves will grow faster.

The book is now at $10m so we are reserving around $16,000 per month.

In the first 6 months after launch (our first two cohorts) we had most of the write-offs. This is the biggest single write-off but the arrears rate is stable and declining as that part of the book runs off. We know the intimate details of each write-off as there has only been 6 totalling $100,000. We review every default against policy to identify policy/process weaknesses and then close the gaps. More recent cohorts are performing very well with next to no arrears and no surprises.

Defaults tend to spike around 12 months. Earlier then that is usually fraud related and we're not seeing any recent defaults which is good. Our arrears rate is very low at 1.70% overall and 2.80% on the older book.

What's working really well for us now (as we've evolved and learned and adapted) is that 100% of bank data comes to us electronically, we have comprehensive credit reporting, multiple credit bureaus, and tighter policy around self-employed and some migrant segments based on what we've observed in the book. We are constantly looking at ways to improve our credit decisions and are looking to publish more data to the web site.

Cheers, JB

[Entrep]

Love the engagement JB. Thumbs up from me.

[Saamee]

You guys are fast! It was one loan of $33,000 secured over a house where his business has gone under and took the house out too! It was a C grade. It had been in arrears for a while so good to write it off. We'll still look to recover what we can.

In the early days we're going to have swings like this, but they'll decrease and the reserves will grow faster.

The book is now at $10m so we are reserving around $16,000 per month.

In the first 6 months after launch (our first two cohorts) we had most of the write-offs. This is the biggest single write-off but the arrears rate is stable and declining as that part of the book runs off. We know the intimate details of each write-off as there has only been 6 totalling $100,000. We review every default against policy to identify policy/process weaknesses and then close the gaps. More recent cohorts are performing very well with next to no arrears and no surprises.

Defaults tend to spike around 12 months. Earlier then that is usually fraud related and we're not seeing any recent defaults which is good. Our arrears rate is very low at 1.70% overall and 2.80% on the older book.

What's working really well for us now (as we've evolved and learned and adapted) is that 100% of bank data comes to us electronically, we have comprehensive credit reporting, multiple credit bureaus, and tighter policy around self-employed and some migrant segments based on what we've observed in the book. We are constantly looking at ways to improve our credit decisions and are looking to publish more data to the web site.

Cheers, JB

Yes, Good on you JB for the upfront honesty and transparency.

It will take you much further than Metiria Turei!

[lawson]

Had a loan repay in full yesterday about 9 months into a 3 year term. Was able to reinvest immediately so no worries. It actually makes sense to me that people borrowing in this way would knock the loan on the head as circumstances allowed. Main thing is to get the rate of interest on the money invested and be able to roll it on to someone else when someone repays.

A further 51,000 awaiting funding at 9% for 5 years at the moment according to the portal

[icyfire]

There is now 93k for 5 years awaiting funding if anyone is interested.

[Saamee]

360K currently waiting for investing in 5 Year loans....

5 Year lending appears to have slowed right down since the end of the last quarter at SM

Has anybody been getting serious funding into 5 Year loans recently apart from rats and mice single figures?

My Interest and Capital payments from SM are now going into Finance Direct ( Lending Crowd's parent )

[beacon]

Interesting that Squirrel issues loan to borrowers at fixed listed rates (average 12.56% according to the site currently), takes its 2% cut, deducts its 2% shield buffer, but then also keeps the Investor rate difference (loan bought first by squirrel at 9%, then onsold to investor at 8.5%, due to lack of sufficient loans causing investors to undercut each other). Isn't this a hidden unadvertised fees on loan, or have I misunderstood this model?

[Saamee]

Interesting that Squirrel issues loan to borrowers at fixed listed rates (average 12.56% according to the site currently), takes its 2% cut, deducts its 2% shield buffer, but then also keeps the Investor rate difference (loan bought first by squirrel at 9%, then onsold to investor at 8.5%, due to lack of sufficient loans causing investors to undercut each other). Isn't this a hidden unadvertised fees on loan, or have I misunderstood this model?

Or just Free market principles at work?

[beacon]

Or just Free market principles at work?
Free market in the ability investors have to undercut each other and jump the Q. But if you are Squirrel, and you buy a $100,000 loan at 9% for 5 years and sell it a microsecond later to 10 investors at 8.5%, you are reaping 0.5% on the life of the loan with no money down. In my understanding it is called Fee, not Free Market... but maybe that's not what Squirrel is doing... Or is it? :eek2:

[Entrep]

Wow, you're saying Squirrel is bidding for loans on its own platform? That would be highly unethical...

And yes I am having trouble putting money to work now.

[Saamee]

Wow, you're saying Squirrel is bidding for loans on its own platform? That would be highly unethical...

And yes I am having trouble putting money to work now.

Yes, I was not quite sure what Beacon was trying to say.

I know I have bought Squirrel loans before ( @ 9% ) - Sounds like somehow Beacon knew they were SM issued loans and then the free market of Investors had a Dutch Auction lowering the rate obtained!

[icyfire]

@beacon (https://www.sharetrader.co.nz/member.php?4839-beacon) SM has got to make money somehow. SM is a business with employees, rent, etc to pay as well as a platform to maintain and marketing expenses and the list goes on. I'm personally very happy with the returns, much better than the 3% I would get from bank term deposits.

[icyfire]

Squirrel Money has just passed the $2mil mark of Potential Borrowers for the first time ever.
9252

[joker]

Squirrel Money has just passed the $2mil mark of Potential Borrowers for the first time ever.
9252
Well that didn't last very long. 5 hours later and I can't see where $700k has gone! Certainly wasn't picked up by SM lenders.
9253

[Saamee]

Well that didn't last very long. 5 hours later and I can't see where $700k has gone! Certainly wasn't picked up by SM lenders.
9253

@joker... Your were looking at 5 Year loans only whilst icyfire was looking at all the terms of loans!

[beacon]

SM has got to make money somehow. SM is a business with employees, rent, etc to pay as well as a platform to maintain and marketing expenses and the list goes on.
That's what they charge a service margin for, isn't it?

BTW Saamee, I was asking a question, not making a statement...

[Entrep]

It looks like as more money comes into SM from investors, interest rates you need to bid to get invested come down (logical I guess), shame it doesn't work the other way as more borrowers come onto the platform.

Here I am looking AGAIN for somewhere to invest my money easily.

[Saamee]

Here I am looking AGAIN for somewhere to invest my money easily.

Exactly.. We all got the Email from SM yesterday, saying "Don't Give Us Any More $$$ Right Now"!

[JB@Squirrel]

Interesting that Squirrel issues loan to borrowers at fixed listed rates (average 12.56% according to the site currently), takes its 2% cut, deducts its 2% shield buffer, but then also keeps the Investor rate difference (loan bought first by squirrel at 9%, then onsold to investor at 8.5%, due to lack of sufficient loans causing investors to undercut each other). Isn't this a hidden unadvertised fees on loan, or have I misunderstood this model?


Sorry Beacon hadn't been on here a while so just picked up your query.

The borrower rates are carded based on their risk (including applied risk premium) and assuming the high end of the investor bid spread. The borrower always gets the advertised rate. The Squirrel margin is also always the same (1% on A grade, 2% on B grade ....) If investors bid down their return we pass the difference to the reserve fund which benefits all investors and covers any potential losses.

At the moment we've had a bit of a surge in investor activity so we have surplus funds in the platform and investors have started to bid rates down a bit. This will be good for growing the reserve fund.

We've got about $1m of borrowers coming through monthly and whilst that is growing, it's only growing slowly. The joys of 100% retail funding and wanting to keep acquisition costs sustainable!

[JB@Squirrel]

Free market in the ability investors have to undercut each other and jump the Q. But if you are Squirrel, and you buy a $100,000 loan at 9% for 5 years and sell it a microsecond later to 10 investors at 8.5%, you are reaping 0.5% on the life of the loan with no money down. In my understanding it is called Fee, not Free Market... but maybe that's not what Squirrel is doing... Or is it? :eek2:

We don't bid on any loans for 24 hours and then we only bid in at the maximum investor rate to settle the loan, so Squirrel never makes any money on the secondary market and the investor return is maximised. We essentially only bid in where there is a shortage of investor funds to get the loan settled. We're not bidding at all at the moment as plenty of investor bidding going on. Hope that clarifies.

We've had a big week of loan settlements this week, so will hopefully clear surplus investor funds over the coming couple of weeks.

[beacon]

Thank you JB. Refreshing to see your engagement and transparency - to educate and clarify ...

[morphs]

Not much going on at Squirrel lately. I've had 3K waiting to be invested for 5 years at 8.75% now for over a week and it's still sitting there. Longer term, there needs to be a better re-investment process than this otherwise surplus cash is just sitting around too long.

[Investor]

Not much going on at Squirrel lately. I've had 3K waiting to be invested for 5 years at 8.75% now for over a week and it's still sitting there. Longer term, there needs to be a better re-investment process than this otherwise surplus cash is just sitting around too long.

Clearly it is related to the availability of loans rather than the "reinvestment process"

[RGR367]

Not much going on at Squirrel lately. I've had 3K waiting to be invested for 5 years at 8.75% now for over a week and it's still sitting there. Longer term, there needs to be a better re-investment process than this otherwise surplus cash is just sitting around too long.

Took two weeks for my 2 year offers to be taken and the one remaining on a 5 year-term has been sitting there for almost a month now. So yeah, not much demand there at the moment. But maybe after the holidays ..............

[Saamee]

I see Squirrel continues to get even more choked up with Investor Funds on offer for 5 Years.

As of this morning 330K for Investment offers as low as 8.45% for 5 Years!

9291

[beacon]

http://www.scoop.co.nz/stories/BU1711/S00861/fma-publishes-first-peer-to-peer-crowdfunding-returns.htm?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Tuesday+28+ November+2017 Interesting Overall picture

[AndyKiwi]

Why don't any P2P companies allow opening joint accounts just like a bank does? It would be so convenient for mum and dad investors. Can Mr. JB@Squirrel throw some light on this? Thanks in advance.

[Saamee]

Hats off to Squirrel Money for continued attention to Customer Service over Xmas Day and Boxing Day...................

I processed account Withdrawals on BOTH Days and they were actioned same day ( ASB to ASB )

Well Done to Charles and the Team :) Happy New Year to all @ SM.....

[unhuman]

So I see there are loan/s on the secondary market for $484. Does anyone know how to bid on this - considering the minimum investment offer must be $500?

[Saamee]

So I see there are loan/s on the secondary market for $484. Does anyone know how to bid on this - considering the minimum investment offer must be $500?

Never quite worked that one out!

Maybe the "Enlightened" will respond!

[beacon]

I think it is matched with the first one in Q on that rate. Have a Happy New Year, fellow investors....

[beacon]

That's the bidder's Q

[Saamee]

Good to sight that the "Reserve Funds Coverage Ratio" has again attained Double the "Expected Loss Rate".

Speaking for myself only - It provides an added feeling of Security.


9437

[Saamee]

SM took a largish Write Off over night ( 47.5K )

Last night.
9491


This morning.
9492

[icyfire]

You got to love SM's reserve fund doing the job that was set up to do

[Saamee]

Exactly :)

I see the Reserve Fund Levy ( which borrowers pay ) is now at a high of 2.05%.

This is positive as it 'fills up' faster.....

[Saamee]

RWT Certificates for the 2017 \ 2018 Tax Year have been ready for Downloading from the SM website for a good few days now already :)

[alistar_mid]

SM took a largish Write Off over night ( 47.5K )

Last night.
9491


This morning.
9492

err what? you took a $48k write off?

[Investor]

err what? you took a $48k write off?

SM being squirrel money. The default was billed to the reserve fund they have, which each member contributes towards.

[Saamee]

SM being squirrel money. The default was billed to the reserve fund they have, which each member contributes towards.

Yeah.. Thanks @Investor - I wasn't going to answer!

[leesal]

Just put on my first bid :)

How long does it generally take to place a 9% order?

I read that JD mentioned 3% interest for on-call funds. Has that been activated?

Have a good chunk in Harmoney am happy with that being locked away medium term. SM appeals provided the secondary market works for liquidity if needed.

[Saamee]

Just put on my first bid :)

How long does it generally take to place a 9% order?

I read that JD mentioned 3% interest for on-call funds. Has that been activated?

Have a good chunk in Harmoney am happy with that being locked away medium term. SM appeals provided the secondary market works for liquidity if needed.

I just had $$'s in for 7 Days waiting for 8.9%..... Removed the funds after 7 days had passed and not a chance of getting close to that level.

Currently it is a "Dutch Auction" down to lowest rates I have ever seen ( about 8.45% for 5 Years! )

The P2P Lenders DO Not offer Interest of Your fund held ( otherwise they have to conform more to Banking Regs )

[icyfire]

@leesal Given that there is currently $239,506 of bids in the market for 5 years it might take 1-2 weeks.

The beauty with SM is that you create your order and then go to the beach! I personally don't use the HM auto-lending function so I find SM to be a lot less time consuming.

[leesal]

Thanks Guys. Did wonder with that much how long withh 200k+ out

I'll still try top dollar. Its FIFO right? Might be worth painting the house and see if gone through when its dry.

Would be much nicer if all the investors went in at 9%, and waited patiently in line ;)

[Saamee]

Thanks Guys. Did wonder with that much how long withh 200k+ out

I'll still try top dollar. Its FIFO right? Might be worth painting the house and see if gone through when its dry.

Would be much nicer if all the investors went in at 9%, and waited patiently in line ;)

@leesal - Do you have an update on movement?

[leesal]

Nothing. Still bidding for $500 worth at 9%.

Have no idea on whether any loans before mine on 9% have been filled.

[Saamee]

Nothing. Still bidding for $500 worth at 9%.

Have no idea on whether any loans before mine on 9% have been filled.

Yes it sure would be good if you could monitor your progress down the queue!!

[icyfire]

The "Recently Funded" figure changes on a regular basis so that means all the orders with lower interest rates are picked up first

[Saamee]

Nothing. Still bidding for $500 worth at 9%.

Have no idea on whether any loans before mine on 9% have been filled.

@leesal > Any movement for you?

[Minvestor]

It's clear that many of us (myself included) are very happy with about 8.5% interest on 5-year loans. I think there are quite a few reasons:
1. In the context of bank interest rates running at just over 4%, 8.5% is excellent
2. Bidding around this figure greatly increases the rate at which investments are taken up, avoiding money just being squirreled away in Squirrel's bank account (sad no interest for that...)
3. Keeping lender interest rates as low as possible probably decreases borrower defaults and problems -- though defaults matter less to us than to other P2P lenders
4. It stops me feeling I'm committing the sin of usury, and may still go to heaven

--any other reasons, for or against?

[leesal]

Reason against - Race to the bottom.

Is +4.5% an adequate MRP for the inherent riskiness of the debt

@ Saamee - no movement. Filtering a good chunk through Harmoney, not that worried if doesn't get picked up.

[Saamee]

Reason against - Race to the bottom.

Is +4.5% an adequate MRP for the inherent riskiness of the debt

@ Saamee - no movement. Filtering a good chunk through Harmoney, not that worried if doesn't get picked up.

Same same but different! As my Invested funds get repaid from Squirrel - @ 9% ), they are being shifted across to Lending Crowd with a current NAR of 13.45% return :)

[Gill]

I have moved all of my money from Squirrel already due to low return of 8.5%. The reason to open an account with squirrel was the Reserve fund which gave me a sense of safety against loan defaults. I have been able to achieve 12.5% with Harmoney in the last 3 years and it is easier to find loans to lend on their platform.

LC is even better than Harmoney when it comes to returns but it is near impossible to find loans there.

[icyfire]

There has been a very low number of loans on HM in the last few weeks and out of those very few loans I wouldn't invest in 90% of them. It makes no sense to me to invest in HM loans at 9% interest rate considering those loans are unsecured, HM charges 15-20% in fees and HM can be very time consuming and time is money.
For the reasons above I'm personally very happy with earning 8.5% return on Squirrel Money.

[Saamee]

Just put on my first bid :)

How long does it generally take to place a 9% order?

I read that JD mentioned 3% interest for on-call funds. Has that been activated?

Have a good chunk in Harmoney am happy with that being locked away medium term. SM appeals provided the secondary market works for liquidity if needed.

@leesal > 1 month today... Did you ever get in @ 9%??

[leesal]

@leesal > 1 month today... Did you ever get in @ 9%??

Nope. Order still there, probably wont be placed after a year!

How are you getting on with LC? I placed 3 loans there 2 weeks ago, but haven't seen anything since. Better chance of catching a cold.

[Saamee]

Nope. Order still there, probably wont be placed after a year!

How are you getting on with LC? I placed 3 loans there 2 weeks ago, but haven't seen anything since. Better chance of catching a cold.

Actually got into 4 x Loans @ LC over the last 7 days....

However still have funds there to invest more into.

Have read on the HM thread about lack of loans..... LC has been much quieter too since the beginning of this month!

Have heard their Ad's over the radio often everyday recently...

[Saamee]

Today @ SM there is Funding from Lenders on offer for 5 Year Loans at a new low of 8%.

9744

[jallison]

Very much so,Doing this with Lending Crowd as there is a similar problem there

[BWH]

I've never had to wait this long to get an investment filled and at low interest rates too.

[Saamee]

Anybody else using the SM App on Android ( Samsung phone ) and not getting the App Notofications when there is a Credit to the account??

Am running two different accounts and both have the same Error = Lack of App Notification ( maybe see one once a week only - where there may have been 4 credits that week )

SM have not been too helpful trying to blame the phone!! However the phone has been changed twice in the last year and the problem has been sighted over all 3 phones!!

[icyfire]

I'm excited about the major changes coming to the SM platform over the next few weeks. I'm hoping this will increase the number of loans available for investment

[unhuman]

So some big changes coming then... I assume they are targeting their existing mortgage base for these new homeowner loans.

SM looking like a very conservative investment now. Max rate 8.5% with double protection being first the reserve fund and security on the homeowner loans.

Would I be right in assuming that most who take out the homeowner loans will consolidate into their mortgage, at which point SM looks very much like one year term deposits on slightly higher rates.

Personally this is too low risk / low return for me. One assumes they are targeting big sums held on term deposit.

[icyfire]

The new changes will give people more investment options and that's a good thing. 6.00% p.a. is still better than 3.50% p.a. bank term deposit

[Entrep]

So some big changes coming then... I assume they are targeting their existing mortgage base for these new homeowner loans.

SM looking like a very conservative investment now. Max rate 8.5% with double protection being first the reserve fund and security on the homeowner loans.

Would I be right in assuming that most who take out the homeowner loans will consolidate into their mortgage, at which point SM looks very much like one year term deposits on slightly higher rates.

Personally this is too low risk / low return for me. One assumes they are targeting big sums held on term deposit.

Where are you getting 1 year term deposits any where near that high?

[unhuman]

Not what I said.

Based on the email they sent out it appears SM are positioning themselves further away from Harmoney at the lower returns end of the market attempting to entice people with large sums tied up in term deposits who can earn much greater returns for a minimal increase in risk while keeping liquidity. Looks to be a great opportunity for these people. Looks to be a great opportunity for SM as well to leverage off their mortgage business as customer growth for them based off small retail investors on debt consold's is likely limited.

I applaud SM's retail only focus and will continue to reinvest the funds I have in them currently - being roughly 5% of my portfolio and the only real cash investment held as hedging. But I won't be introducing anything further for these new loans at 6-8% gross is too conservative for someone in my age bracket.

[Minvestor]

Anyone else having trouble logging into Squirrel today? Can't get the login screen either on Edge or Chrome.

[alundracloud]

Selling two loans-
1. $477.02 @ 8.5% (4yrs, 10mnths)
2. $464.39 @ 8.35% (4yrs, 5mnths)

They're available on the secondary market now.

[Bjauck]

Not what I said.

Based on the email they sent out it appears SM are positioning themselves further away from Harmoney at the lower returns end of the market attempting to entice people with large sums tied up in term deposits who can earn much greater returns for a minimal increase in risk while keeping liquidity. Looks to be a great opportunity for these people. Looks to be a great opportunity for SM as well to leverage off their mortgage business as customer growth for them based off small retail investors on debt consold's is likely limited.

I applaud SM's retail only focus and will continue to reinvest the funds I have in them currently - being roughly 5% of my portfolio and the only real cash investment held as hedging. But I won't be introducing anything further for these new loans at 6-8% gross is too conservative for someone in my age bracket. At this stage of the cycle it may well be the time to de-risk. After years of low interest rates and quantative easing, after a prolonged boom in asset prices including real estate and share prices, 8% gross pa going forward for the next few years could be a good return.

[Saamee]

Has Anyone got an order filled at the 'good old day' rates of 9% in say the last 5 months??

[icyfire]

9% no longer exists. the highest rate is 8.5% for 5-7 years. It appears that the fastest way to get your money invested and working for you is 6% for 1 year which is still double what you get for a bank term deposit.

[Saamee]

9% no longer exists. the highest rate is 8.5% for 5-7 years. It appears that the fastest way to get your money invested and working for you is 6% for 1 year which is still double what you get for a bank term deposit.

Thanks for the update ICYFIRE... I'll ask a different question now :)

Has Anyone got an order filled at the rate of 8.5% in say the last few months??






I see as of today, there is 133K of funds waiting for 8.5%

[icyfire]

I see as of today, there is 133K of funds waiting for 8.5%
There is no funds waiting for that rate so it must have gone.

[Saamee]

There is no funds waiting for that rate so it must have gone.

We must be looking at different pages!! 5-7 Years still 133K waiting to go!!

10154

[icyfire]

Has anybody managed to invest in loans for 5-7 or 2-3 years recently? If so, at what rate?

Currently there is $131k for 1 year awaiting funding.
I'm thinking that it would be better to put money to work now and get 6% return instead of waiting for weeks/months for a higher return.

What y'all think?

[TB@squirrel.co.nz]

Hi icyfire. I'm CFO at Squirrel.
We are definitely still getting loans pushed through in the 5-7 and 2-3 year categories - around 60% of the new lending this month.
The loans funded in the 5-7 year bucket this month have had an average investor rate of 8.14% and 7.03% for the 2-3 year loans.
I would encourage you to look at the 1 year loans for at least a portion of your investment portfolio. We have a strong pipeline in that space and as you highlight - you can have your money invested almost immediately with the $131k of loans currently awaiting funding.
The key feature of these one-year investments (other than the lower return of-course) is that it is interest only for the first 12 months - so investments don't get repaid quite so quickly.

[couta1]

Decided to venture over here for a bit of diversity, will see how it goes but if I dont get any bites after a few weeks I'll be out.

[icyfire]

Decided to venture over here for a bit of diversity, will see how it goes but if I dont get any bites after a few weeks I'll be out.
Squirrel Money is more of a set it and forget it kind of P2P platform unlike other p2p lending platforms which are very time consuming.

[Saamee]

FY2019 RWT Tax Certificates are already available Online for Download :)

[CageyB]

Anyone having any luck at all with Squirrel recently? The loan volume appears to have collapsed, even more so than Harmoney.

[couta1]

Anyone having any luck at all with Squirrel recently? The loan volume appears to have collapsed, even more so than Harmoney. Yep hard to get any money loaned out for 2-3 yrs for over 6.5%.

[Bjauck]

Anyone having any luck at all with Squirrel recently? The loan volume appears to have collapsed, even more so than Harmoney.
I wonder if loan volume has dropped as a result of the fall in house sales and as a result of drop in loan demand more generally. It would be interesting to see if bank lending has fallen too. Also perhaps some people are waiting to see if there are major tax reforms as a result of the TRG report before taking on loans.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12221621

[beacon]

Looks like high interest loans available on Squirrel secondary market, but buyers queuing up for lesser interest rates. Unaware? Does Squirrel inform its investors, I wonder ...

[TB@squirrel.co.nz]

Looks like high interest loans available on Squirrel secondary market, but buyers queuing up for lesser interest rates. Unaware? Does Squirrel inform its investors, I wonder ...

Hey there beacon.
Thought I would jump in and respond to your post - its a good question to raise...

Loans that appear on the Squirrel P2P Secondary Market will generally get matched automatically on the following basis:

Investor Interest Rate
The new Investor(s) must have an Investment Order with an interest rate that is less than or equal to the interest rate of the investment being sold. In this regard, a matched Investor that had an Investment Order with a lower interest rate will benefit by receiving the higher interest rate on the investment being sold. The platform will match from the lowest interest rate to the highest.

Investment Term
An Investor will automatically be matched to and transferred into an investment that is being sold if their Investment Order matches the amount (greater than or equal to) and interest rate (less than or equal to) - noting the selection order mentioned above. The Investment Term remaining on the investment to be sold must be within 3 months of their requested term for 24-month and 36-month Investment Orders or 12 months for 60-month Investment Orders. For example,an Investor with an Investment Order for 36 months will automatically be matched to an investment being sold with 34 months remaining (assuming the Investor Interest Rate criteria is met). An email will be sent to anew investor to accept or decline an investment when the remaining term on an investment that is for sale is outside this tolerance.

Loans that have experienced a credit event
Investments being sold where the underlying Loan has suffered a Credit Event (i.e. missed repayment(s),hardship, default) will not be automatically matched to an Investment Order and instead an email will be sent to the new Investor disclosing the details of the Credit Event associated with the Loan and providing an opportunity to accept or decline the investment on that basis. Under this scenario, a new Investor continues to benefit from the protection offered by the Reserve Fund and does not directly bear the credit risk of the underlying Loan to which they are investing.

When you see loans sitting on the secondary market for longer than an hour or so, it is usually because the remaining term on the loan slips outside the tolerances for auto matching above, or the loan being sold has had some form of credit event. In those cases, the platform will be waiting for confirmation from the investor(s) who best match the loan (one way or the other).

Hope this answers the 'wondering' from your post a few weeks back.

Cheers,
Tim (CFO at Squirrel)

[beacon]

When you see loans sitting on the secondary market for longer than an hour or so, it is usually because the remaining term on the loan slips outside the tolerances for auto matching above, or the loan being sold has had some form of credit event. In those cases, the platform will be waiting for confirmation from the investor(s) who best match the loan (one way or the other).

Thanks Tim. I am told that the wait, even on loans without any credit event, isn't hours - but can be days or even weeks. That doesn't sound an easy or simple exit. Still wondering ...

[TB@squirrel.co.nz]

Thanks Tim. I am told that the wait, even on loans without any credit event, isn't hours - but can be days or even weeks. That doesn't sound an easy or simple exit. Still wondering ...

Thanks for bringing this to my attention @beacon – to my knowledge we've not heard from any investor about this issue previously so we’re digging into this to see what might be causing delays with transfer requests.

From my initial review, it looks like there could be a bottleneck in our processing when the investment up for transfer doesn’t meet the automatic transfer criteria outlined in the Secondary Market Rules - usually because the remaining term on the investment is below the term tolerances or the loan the investment relates to has had a credit event at some point.

What happens in those scenario's is that investors are offered the investment one by one until someone accepts i.e. if first investor declines the offer, it is offered to the next investor in the queue and so on with each investor given 24 hours to accept or decline. It is that process that looks to be causing delays – so the team are working through some examples to see what we can do to speed the process up which may include adjusting the tolerances or perhaps offering the investment to a wider group in the first instance.

It looks like the average transfer time this year is around 2 days - but there is certainly evidence that investments are taking a lot longer than that to shift when the scenarios above present.

I will report back when we get to the bottom of the issue and have a resolution.

[beacon]

From my initial review, it looks like there could be a bottleneck in our processing when the investment up for transfer doesn’t meet the automatic transfer criteria outlined in the Secondary Market Rules - usually because the remaining term on the investment is below the term tolerances or the loan the investment relates to has had a credit event at some point.

A credit event is really irrelevant to an investor because of the reserve fund. That is why they pay the 2% extra for every loan (good or bad), don't they?

The remaining investment term is also really irrelevant to an investor (except for the higher interest rate higher term loans offer alongwith greater probability of greater longevity) because these loans can be repaid early without penalty irrespective of investment term anyway.

So, if dozens of loans are sitting in your secondary market unsold for weeks (even months for the odd ones, I've heard) at 8%+ when investors are queuing to be filled at 6%, there are definitely serious bottlenecks in your system. Interestingly, this is when your webpage apologizes for investment delays on account of loan demand exceeding supply.

I'm also told your secondary market is opaque to most of your investors at most times, because secondary market loans at rates higher than your bidding range are rarely visible to your investors. Perhaps sunlight will do the Squirrel loans some good. :)

[TB@squirrel.co.nz]

A credit event is really irrelevant to an investor because of the reserve fund. That is why they pay the 2% extra for every loan (good or bad), don't they?

The remaining investment term is also really irrelevant to an investor (except for the higher interest rate higher term loans offer alongwith greater probability of greater longevity) because these loans can be repaid early without penalty irrespective of investment term anyway.

So, if dozens of loans are sitting in your secondary market unsold for weeks (even months for the odd ones, I've heard) at 8%+ when investors are queuing to be filled at 6%, there are definitely serious bottlenecks in your system. Interestingly, this is when your webpage apologizes for investment delays on account of loan demand exceeding supply.

I'm also told your secondary market is opaque to most of your investors at most times, because secondary market loans at rates higher than your bidding range are rarely visible to your investors. Perhaps sunlight will do the Squirrel loans some good. :)

Hi Beacon - you are correct regarding the relatively low relevance of the credit event disclosure given our reserve fund model, that disclosure is however a condition of our secondary market licence – so we can’t avoid doing that unfortunately.

I also agree with your feedback regarding the remaining investment term - and we are currently looking into widening the remaining term thresholds for automatic matching.

Regarding the small number of investments that are moving slowly through the secondary market process, we are working hard to scope the technical resolution that will help them move through quicker and should have something ready to go in the next few weeks. This particular change isn't going to solve our supply/demand issue though I am sorry and it won't get an investor bidding into a one-year interest-only loan at 6% get into a P&I term loan at 8%+.

In the meantime, I would encourage investors to check their junk emails for Squirrel Money emails with the subject “We’ve found an investment that matches your criteria” – that is the notification we send out when an investment outside the automatic matching criteria is available to you - but you have to physically accept it before the platform will match you up. These emails often find their way into junk email folders and aren’t being seen and in some circumstances our system is re-sending them each day until they are – so we’re also looking at better ways to notify investors of this sort of thing and to stop the looping that seems to be occurring.

I’m not entirely sure what you mean by opaque but, by design, investors generally won’t/shouldn't notice that they have been matched to a secondary market loan if the investment meets the automatic matching criteria outlined in our Secondary Market Rules document. Yes, on occasion they may benefit from the higher rates if the investment being offered for transfer is one from more than a couple of years ago, but that is just the luck of the draw. The Squirrel platform wasn’t designed so that those investments can be targeted per se, they just go to the best matched investor in the queue. To me, that seems the fairest approach don't you agree?

Finally, I appreciate the feedback @beacon, it really can help improve the platform for all investors.

[beacon]

Yes, on occasion they may benefit from the higher rates if the investment being offered for transfer is one from more than a couple of years ago, but that is just the luck of the draw. The Squirrel platform wasn’t designed so that those investments can be targeted per se, they just go to the best matched investor in the queue. To me, that seems the fairest approach don't you agree?

How is your secondary market fair to loan vendors who have to sacrifice 1% interest as loan sale fee but still have to wait weeks or months to receive their funds back? Kind of waters down the benefit of a secondary market a lot, with investors not knowing when they'll be able to exit their investment (if at all!)

Banks/finance cos. charge the 1% break/penalty fee too but&nbsp;their redemptions are instantaneous. Your model is different, but Squirrel pitches itself as better than these in the first place to justify its comparatively lower interest rates vs the NZ P2P sector, isn't it?

I think if no acceptance confirmation emails were needed from the investor for making the initial investment in a loan (making your process automatic), then none should be needed for investing in the secondary market loans either&nbsp;(making this process automatic), since you do not disclose loan details at initial investment anyway and acknowledge that credit events and loan terms don't really disadvantage a secondary market loan buyer. In fact, everyone then gets a chance to benefit from an improved rate (rather than just the lucky guy who happened to check his junk mail folder in time). Now that would be fairer, don't you think?

Anyway, good to see that you seem genuinely interested in listening to feedback and making some effort to improve your platform.

[TB@squirrel.co.nz]

How is your secondary market fair to loan vendors who have to sacrifice 1% interest as loan sale fee but still have to wait weeks or months to receive their funds back? Kind of waters down the benefit of a secondary market a lot, with investors not knowing when they'll be able to exit their investment (if at all!)

Banks/finance cos. charge the 1% break/penalty fee too but&nbsp;their redemptions are instantaneous. Your model is different, but Squirrel pitches itself as better than these in the first place to justify its comparatively lower interest rates vs the NZ P2P sector, isn't it?

I think if no acceptance confirmation emails were needed from the investor for making the initial investment in a loan (making your process automatic), then none should be needed for investing in the secondary market loans either&nbsp;(making this process automatic), since you do not disclose loan details at initial investment anyway and acknowledge that credit events and loan terms don't really disadvantage a secondary market loan buyer. In fact, everyone then gets a chance to benefit from an improved rate (rather than just the lucky guy who happened to check his junk mail folder in time). Now that would be fairer, don't you think?

Anyway, good to see that you seem genuinely interested in listening to feedback and making some effort to improve your platform.

Thanks @beacon. Just to clarify, as I stated above, the confirmation email is only required if: 1) the loan has had a missed payment or the like at some point, or 2) the remaining term of the investment is outside of the automatic matching rules documented in the Secondary Market Rules. The first criteria is mandated by the FMA as part of our licence to operate the secondary market - so we have no discretion with that, the second forms part of the rules we thought appropriate when launching the secondary market - so we can and will be amending that one fairly soon to help improve the efficiency of the secondary market.

The point you make about the 'lucky guy who happened to check his junk mail' isn't quite right - the 'lucky guy' as you put it is actually the best matched investor for that investment per the Secondary Market Rules - effectively the investor at the front of the queue - so yes I do think that is the fairest approach and I do not see that changing. EDITED - perhaps we could look at offering it to a larger group, say the top 10 investors in the queue - that would presumably speed up the transfer process.

Finally, the investment propositions and platform functionality available in the market clearly varies between P2P providers and the various financial institutions about – and yes, the rates our investors have achieved may be lower than some others – but ultimately it comes down to investor risk appetite and what features of each platform they value.

We’ll keep working on the resolution for the small number of investments travelling slowly through the secondary market – and I’ll let you all know when its resolved.

All the best with your investing.

[Saamee]

Any one recently Invested funds @ 7.5% ( 5 - 7 Year Loans )...... What is the current wait time like > From placing Funds to Order being Fulfilled??

I see that there is currently over 450K waiting in the 7% Rate queue

[BWH]

~$7500 fulfilled roughly 3 weeks ago after about a month on offer. It was taken up in 2 lots.

[unhuman]

Big changes coming based on the email I got today.

Good to see Squirrel doubling down on 100% retail P2P considering the news re Harmoney.

[TB@squirrel.co.nz]

Hi @beacon - just thought I'd provide an update on the delays in the secondary market.

We have investigated the causes of slow investment transfers and identified a bunch of improvements and some system fixes that we can implement to improve the efficiency of the secondary market. A number of these have already been moved into production and we have now cleared all investments offered for sale before today other than one small investment that has a credit event associated with it that has been out for transfer for a few weeks.

In addition to the tweaks to software and the process, we have implemented more regular monitoring of any investments that might get ‘stuck’ in the process. The reasons for things getting stuck look to be quite complicated as they seem to require a number of seemingly unrelated factors that come together and collectively that contribute to bottlenecks – but the most likely reason we've seen looks to be an investor either not seeing the offer emails or not quite understanding what they are being offered. We have recently started contacting those investors via phone to explain the situation and walk them through it to some form of conclusion.

Using email notifications has also clearly created issues with investors not seeing them if they go into a spam folder etc. To remedy that situation, we are looking at options around push notifications via our mobile apps which we think will greatly improve the efficiency of that notification process. That isn’t able to be implemented immediately though unfortunately.

Finally, it became clear that our automatic matching rules resulted in too many unnecessary exceptions so we have scoped some widening of the acceptable tolerances (usually remaining term related) to more pragmatic levels and are planning to roll out those amendments in the next few weeks which will further improve the efficiency of the secondary market.

It is fair to say that this has proven to be a bigger can of worms than I anticipated when we first started communicating – but it has been a valuable process and has greatly improved this aspect of our platform - so thanks for all your feedback!

Tim

[Bjauck]

I see that the Squirrel Reserve Fund has dropped since I last looked about a month ago. If it continues to drop, can Squirrel increase the proportion of interest that is credited to the reserve fund, or do thy have to wait until such time that 100% of the interest is needed to be diverted to the reserve fund to cover defaults?

With Corona Virus already causing economic issues, there could be borrowers under stress.

[Saamee]

I see that the Squirrel Reserve Fund has dropped since I last looked about a month ago. If it continues to drop, can Squirrel increase the proportion of interest that is credited to the reserve fund, or do thy have to wait until such time that 100% of the interest is needed to be diverted to the reserve fund to cover defaults?

With Corona Virus already causing economic issues, there could be borrowers under stress.


Squirrel alter the % rate payable, often.

However I doubt that they will change it enough to keep up, if Bad Loans come in faster than in the past.

It must be expected that Bad Loans will come in fast from now on, as Forestry, Hospitality, Travel and Hotel Industries all start to take a Hit!!


I personally took a decision 2 weeks ago not to invest any more in to P2P Loans at this time.

[Bjauck]

Squirrel alter the % rate payable, often...
I personally took a decision 2 weeks ago not to invest any more in to P2P Loans at this time. Thanks. There is a lot of uncertainty around at the moment. With interest rates falling and bad debts increasing, there is the prospect for a big squeeze.

Aussie Bank shares & HGH have been hard hit too. The market is probably expecting a tough time for borrowers.

[morphs]

I suspect the Squirrel Reserve Fund is going to come under a real stress test this year if the predicated recession occurs.

[Saamee]

@morphs - Yes, for sure it will.


Below is the reserve fund figures as of this morning.


So just $485,958 of Bad loans......... and the Reserve Fund is at ZERO!!



11111


11114

[Saamee]

2020 RWT Certificares already available for member download.....

[mp52]

Some defensive PR from Squirrel in the mailbox this arvo ... must be feeling the pinch!



Case study 1
Investing class: Home Loans


A mortgage for an experienced property investor


The first loan on our platform is for $1.4m and is secured over two properties in Point Chevalier, Auckland with $1.1m in security over each. It has a 70% loan to value ratio.


Our credit policy:


Maximum loan to value ratio of 80%
Maximum loan of $1m per property and a total limit of $2m
With our first Home Loan on the platform, the borrower owns $31m in property and has $12m in lending.


The funds borrowed from Squirrel are for working capital and the client is holding $3m in cash. The customer’s property portfolio is diversified and generates over $1m p.a. of income. He has also provided a personal guarantee on the loan. This means that there is someone standing behind the loan who can guarantee the payments at a personal level, similar to when a parent acts as a guarantor on a home loan for their children.


The reason the client borrowed from Squirrel is that banks treat them as a commercial client and will only lend against the income of the property they have security over and with too many covenants. He was prepared to pay a bit more for a simpler borrowing solution.


We felt this mortgage was low risk because:


The client has strong underlying income from a diversified property portfolio
They are carrying a low level of gearing (low LVR)
The security is a first residential mortgage with a loan to value ratio on the properties of 70% and a personal guarantee from the borrower
The borrower holds significant working capital and undrawn revolving credits (meaning he has cash available to him)


You can invest into this mortgage now. The investor return is 4.0% p.a. variable, and you can find out lots more about this investment class from our investor handbook here.


This loan is also protected by our Home Loan Reserve Fund, which protects investors from loan arrears and loan defaults.

[Saamee]

Currently the situation must be very toght for Suirrel Money, I have never before heard them advertising on the radio in NZ.

However over the last month they are pushing loans and webinars to learn more.

They have that massive $1.3M house loan at 4%..... and it looks like the majority of would be investros are NOT interested in taking a slice of it!!

[Bjauck]

Currently the situation must be very toght for Suirrel Money, I have never before heard them advertising on the radio in NZ.

However over the last month they are pushing loans and webinars to learn more.

They have that massive $1.3M house loan at 4%..... and it looks like the majority of would be investros are NOT interested in taking a slice of it!!

At only 4% the risk-reward balance looks tipped more towards risk at the moment. The interest rate would need to be higher to tempt more investors?

[Saamee]

Today received an Email from Squirrel Offering TO PAY us Investors $500 to $1,000 to get into Property \ Business Loans....

Wow they are getting very very Deperate now...

Even more reason to stay away!!!!

[Saamee]

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


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


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



11619


11620

[Saamee]

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

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

[JB@Squirrel]

Hi Saamee,

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

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

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

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

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

As for us being desperate, hardly.

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

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

[Saamee]

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

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


11903

[DT@squirrel.co.nz]

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

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


11903
Hi @saame, Dave Tyrer here from Squirrel. I estimate a 2 week wait at present in the 5-7year personal loan term. Hope that helps.

[Saamee]

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

@DT >> Thanx for the 'Inside reply' ;)

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

Rgds

[Saamee]

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

[Bjauck]

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

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

[DT@squirrel.co.nz]

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

[Bjauck]

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

[DT@squirrel.co.nz]

Hi, I mentioned in my previous post that Squirrel was launching a new lending product, and here it is http://www.squirrel.co.nz/squirrel-loans/launchpad
For those who are investors with Squirrel, we emailed an investor update last night that contains further information.
From an p2p investor perspective, part of this loan will fall into our personal loan investment class with a 5year term. Based on the scale of our mortgage advice team, we believe we will see growth in demand for investor funding in this term. We represent 3.2% of all first home buyers in NZ already, and we believe we can help more people in this part of the market with this proposition.
Interested in your thoughts!

[joker]

Hi, I mentioned in my previous post that Squirrel was launching a new lending product, and here it is http://www.squirrel.co.nz/squirrel-loans/launchpad
For those who are investors with Squirrel, we emailed an investor update last night that contains further information.
From an p2p investor perspective, part of this loan will fall into our personal loan investment class with a 5year term. Based on the scale of our mortgage advice team, we believe we will see growth in demand for investor funding in this term. We represent 3.2% of all first home buyers in NZ already, and we believe we can help more people in this part of the market with this proposition.
Interested in your thoughts!

Hi DT

An interesting concept. Could you please answer the following questions?
Do many prospective buyer fit the requirements particularly in relation to the responsible lending requirements?
How is the equity loan secured (e.g. 2nd mortgage, caveat, other or unsecured)
Presumably, should house prices tank resulting in a negative equity and forced sale event, the equity loan lenders risk taking a bath while the first mortgagee may fare OK?

[DT@squirrel.co.nz]

Hi Joker, here are some answers:
1. If we think about segments within the first home buyer market, Launchpad can help those who are looking at property above the Kaianga Ora thresholds. It's hard to exactly determine the size of the target segment, but we know almost $1b per month is lent to First Home Buyers. Primarily the people we will help will be in metro locations given the Kaianga Ora thresholds. It's worth noting that Squirrel Mortgage Advisors are salary based (not commission), so they are there to find the right deal for our customers, if Launchpad is not the right product for the situation, it will not be offered.
2. The Equity Loan will be secured using a 2nd Mortgage
3. Ultimately risk comes down to whether the borrower chooses to make their loan payments. A borrower could be in a negative equity situation and still making their loan payments. The thing I will be most closely watching will be the unemployment rate. We've taken some extreme scenarios into our modelling, and have we believe a good handle on how the portfolio will perform under various loads. For Squirrel, our starting point is charge a reserve levy on all these loans at a rate that is higher than our modelling suggests the risk will be, so we're erring on the side of caution.

Credit risk is determined by the probability of default * loss given default. You can work through various permutations of this.

[artemis]

Interesting to see how this works out. Looks good to me as it bypasses government restrictions around price, income, Kiwisaver, first home, mortgage insurance etc. And focuses on households who actually have a good shot at home ownership if the deposit requirements are loosened.

So some innovative thinking from Squirrel.

The government First Home scheme has a serious flaw IMO as a combination of very low deposit and low-ish income doesn't allow for much leeway if something goes wrong. Like employment or relationship changes, illness, babies. Yes there is mortgage insurance part paid for by taxpayers, but AFAIK this protects the mortgagee and not necessarily the mortgagor. (Is that right?)

Edited to add - there are likely to be quite a lot of rentals up for sale once the latest changes kick in and owners freak out. Many could well be suitable for FHBs less constricted by current rules.

[malreid]

What is your experience with expected vs actual term of investment on the Squirrel platform? I've made 10 investments over the past 16 months or so across several type classes for various amounts and only 2 have run to full term. The result being ROI received has been tracking about 45% less than anticipated.

[DT@squirrel.co.nz]

Hi @malreid, I look after Squirrels lending and investment business.

For Home Loans and Construction Loans, we do have loans that pay back early and we always have new loans available, so you should be able to remain invested at all times.

For Personal Loans, the 1 year term has a high prepayment rate and this means there is then a wait time in the queue. For the 2-3 and 5-7 year terms the prepayment rate is a lot lower so there should be less issues with having to reinvest. Wait times for the 1year term are currently 1 - 2 weeks, and the 5 - 7 year term is around 30days.

Last but not least, because Squirrel has Reserve Funds in place behind all investments, they help protect you in the event that a loan misses a payment or defaults. To date, no investor has missed the return of their principal or their interest.

Happy to take any other questions.

[Saamee]

Can anyone tell me what the 'expected waiting time' currently is to get into the 5 - 7 year loans is?

Looks like Squirrel has upgraded theri user interface - you used to be able to see the size of the funds ahead of you but now cannot find?

Thanx in advance.

[DT@squirrel.co.nz]

Hi @Saamee, current waiting time is approximately 2-3 weeks for 5-7year loans. There is ~$350k in the queue at present in that term. You should be able to see how much money is in front of you when you've placed an order. I'll take a look at the way we're displaying this information and see if we can improve it. We have made quite a few improvements to the way we display information recently, maybe we missed something in this space.

You might also have noticed that we've reduced the minimum investment amount to $100!

[Saamee]

Hi @Saamee, current waiting time is approximately 2-3 weeks for 5-7year loans. There is ~$350k in the queue at present in that term. You should be able to see how much money is in front of you when you've placed an order. I'll take a look at the way we're displaying this information and see if we can improve it. We have made quite a few improvements to the way we display information recently, maybe we missed something in this space.

You might also have noticed that we've reduced the minimum investment amount to $100!


Hey DT,


Appreciate the swift reply.


Yep. One used to be able to see BEFORE you placed an order.


I have been away form Squirrel for over 12 months riight now, but looking to invest once again.


It sure would be good to view the sie of funds in the queue in front of me BEFORE an order is placed. This used to be shown! :(

[DT@squirrel.co.nz]

@saamee we've updated the information on the investment order pages to address your concern (via the browser). You can see the info in the mobile app also. We're also better reporting what's in the pipeline for our three investment categories. Tell me what you think!

Happy to take feedback from anyone else also.

I was reading the thread on General Capital today. Squirrels loan book is now a smidge below $120m having grown 69% over the last 12 months - so about the same size as General Capital. Our NIM is slimmer than General Capital because we're paying investors more. Squirrel has a very different approach to managing credit risk (proactively and transparently reserving) and liquidity risk largely sits with investors compared with a traditional finance company. Anyone have views on this?

[Saamee]

@saamee we've updated the information on the investment order pages to address your concern (via the browser). You can see the info in the mobile app also. We're also better reporting what's in the pipeline for our three investment categories. Tell me what you think!

Happy to take feedback from anyone else also.

I was reading the thread on General Capital today. Squirrels loan book is now a smidge below $120m having grown 69% over the last 12 months - so about the same size as General Capital. Our NIM is slimmer than General Capital because we're paying investors more. Squirrel has a very different approach to managing credit risk (proactively and transparently reserving) and liquidity risk largely sits with investors compared with a traditional finance company. Anyone have views on this?


Hey @DT


I think what you have just done is AMAZING and shows real flexibility from SM :)

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[DT@squirrel.co.nz]

Hi all, we've just added interest to our Call Account. Our investors will now start earning 3.50% p.a., no fees, no hoops, no tiering of interest. Just a straight up flat rate on every dollar, with interest paid monthly. The returns come from the money sitting in a bank account with a NZ bank, and you don't have to take term investments in order to earn the interest.
So, if you're looking for a place to park emergency funds, or hold cash for a bit, check it out!
Added benefit for those investors in personal loans, you'll now start earning interest while your money is waiting in the investment queue.
Happy to take any questions.

[Saamee]

That is great news and I have already send some funds across from a lower earning Bank!!

[Saamee]

Hey DT,

My New deposit has hit and shown up - all cool.

However in the SM Email you mentioned the interest current Rate, that being 3.5%

On the Website \ App I am unable to find the Call Account Interest rate posted anywhere.

Of course in time the Call Account rate will change...

It would be good to be able to sight the up to date rate on the Website \ App.

Can you point me to where it is shown?

Many thanks.

[Saamee]

Would be great to see the On Call Interest rate on this TAB ( see attachment )

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[DT@squirrel.co.nz]

Hi @saamee, I had a decision to make, do I:
1. Wait until we have the interest rate visible for investors on the screens you point out before releasing the feature; or
2. Get it out there and then follow up with the work on Squirrel Online (what you see when you log-in).

My conclusion was to do number 2 so our investors start getting the benefit. All the changes to Squirrel Online and our mobile app are scoped and being worked on. You'll see the changes progressively released over the next 3 - 4 weeks. Our website (squirrel.co.nz) is up to date and you can find the interest rate there, head to the 'save and invest' tab.

Hopefully you enjoy the benefits!

[Saamee]

Hey that is welcome news :)

Taking option #2 I'm sure was the correct choice!

You guys are very innovative.

[Saamee]

Nice one Squirrel.....

Very fast response to the Reserve Bank rate rise....


14481

[DT@squirrel.co.nz]

Hi Saamee, we'll generally be quick to increase or decrease the rate when the OCR moves.

[Mike64]

Go on then Mate, some other areas deserve some long waiting rises too 😉

[DT@squirrel.co.nz]

Hi Mike, we're reviewing the remainder of our rates at present and expect to make decisions over the next week. I probably should have added that it's the On-call Account interest rates that will be very responsive to OCR moves.

[Saamee]

Been using the Squirrel On Call facility for approx 1 month now.

Easy peasy... I Xfer funds in about 6pm and if needed the next day Xfer them back out ( they arrive approx 2 hours later )

[Saamee]

Squirrel now paying 5% just for keeping your funds 'On Call'.....

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[Saamee]

Squirrel already has upped their 'On Call' rate to 5.25%

Good Job Squirrel \ DT :)

[thegreatestben]

Nice - have recommended the on call account to a few friends and colleagues now.

[Saamee]

The 2023 \ 2024 RWT Tax certificates are already available for Download....

Great work Squirrel....

By the way their Website has changed - Now hidden under Reporting > Tax Certificates.....

[malreid]

Wow, no mucking about here :t_up: Wonder what sort of palaver will be involved getting same out of LC in a timely fashion. Last year was almost shambolic....:bored:

[DT@squirrel.co.nz]

We aim to please.
Any feedback on the improvements to our look and feel from any of you?

[Saamee]

Wow, no mucking about here :t_up: Wonder what sort of palaver will be involved getting same out of LC in a timely fashion. Last year was almost shambolic....:bored:

Interestingly enough the FULL LC Tax details are already uploaded at "MY IR" for the full Tax Year 2023 > 2024

This move almost makes the days of waiting for the RWT Certificate redundant!!!

[Saamee]

We aim to please.
Any feedback on the improvements to our look and feel from any of you?

Hey DT,

It all Working fine..... ( for me! )


Took a bit of working out to find how the revised site works but all good now.

Just keep innovating the way you Guys do....... :cool: