The change from 1 to 2 looks something like:
Grade Change A1 - A2 78% drop B1 - B2 74% drop C1 - C2 3% rise D1 - D2 9% drop E1 - E2 69% rise F1 - F2 4% drop
So I'd say only A and B are showing significant drops from 1 to 2?
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The change from 1 to 2 looks something like:
Grade Change A1 - A2 78% drop B1 - B2 74% drop C1 - C2 3% rise D1 - D2 9% drop E1 - E2 69% rise F1 - F2 4% drop
So I'd say only A and B are showing significant drops from 1 to 2?
The way I'm reading it, your graph is a hazard curve too. It shows that 42% of the defaults in our data pool occurred within the first 15 months of the loan. Harmoney hazard curve (to july 17) stated that almost 60% of the defaults that occurred were within the first 15 months of the loan. Harmoney hazard curve was plotted on maturity approx two-thirds of ours (time wise), which explains some of the improvement in percentage.
I'm getting the distinction you are making, as well as the goal you are aiming at, through Survival rate computation. But how to plot it, given that survival rate gets impacted not just by defaults but by early repaids too? Hmm...
Thanks leesal, very interesting. Also your work on max vs non-max loans, which was supplemented by additional insights from Myles, humvee, Cool Bear and RMJH.
Also interesting was the "grade ceiling overflows" from A limits into the B1 and B2, and B limits into C1, C2 and C4. So, not a ceiling after all, more like a rough guideline...
Some interesting observations emerged as I played around with your trivariate tables today, Myles. For example, while all except 50-59 year olds were high risk when buying new vehicles, all new vehicle buyers in AB grades were cool to loan to (despite small bases by age groups within grade).
Full owners in A grade taking holidays were cool, but in C were high risk. Etc.
While the above 60 wanting loans to buy a new vehicle were not at all cool overall (2 defaults /21 total), we may have to wait until the next data pool to analyze them by grade.
Thanks again for your time and effort in producing and sharing these nevertheless. :)
Not sure if this has been discussed before so just putting it out there - it's really a question: Is a loan paid off in a shorter period, higher, lower or the same risk/value as a loan paid off over a longer period?
Some numbers relating to variants and their average age in months (Paid Off loans only):
Variant Description Loans Avg Mths Age Band 30-39 2852 9.82 Age Band 40-49 3744 10.13 Age Band 20-29 1200 10.58 Age Band 50-59 3039 10.75 Age Band Above 60 948 11.33 Loan Purpose Purchase Boat 42 8.31 Loan Purpose Clear Overdraft 307 8.51 Loan Purpose Funeral Expenses 116 8.53 Loan Purpose Legal Fees 38 8.86 Loan Purpose Computer 60 8.91 Loan Purpose Medical Expenses 150 9.17 Loan Purpose Education Expenses 210 9.20 Loan Purpose Home Improvements 1743 9.36 Loan Purpose Holiday Expenses 1191 9.96 Loan Purpose Household Items 385 10.06 Loan Purpose Purchase Caravan 32 10.37 Loan Purpose Purchase New Vehicle 141 10.46 Loan Purpose Loan to Family Member 150 10.49 Loan Purpose Debt Consolidation 4539 10.56 Loan Purpose Business Cash Flow 436 10.61 Loan Purpose Wedding Expenses 236 10.69 Loan Purpose Tax Bill 57 11.12 Loan Purpose Purchase Used Vehicle 679 11.22 Loan Purpose Other 1271 11.91 Residential Status Owned - Paying Mortgage 5721 9.88 Residential Status Fully Owned - No Mortgage 211 10.43 Residential Status Living with Parents 543 10.51 Residential Status 5 10.61 Residential Status Renting 4119 10.66 Residential Status Boarding 533 10.84 Residential Status Other 497 12.00 Residential Status Supplied By Employer 154 12.14 Term Months 60 8398 9.73 Term Months 36 3385 11.91
The fact that, on average, a 60 month term loan is paid of in less time than a 36 month term loan is just nuts? Perhaps it's human nature to take the extra time and perhaps most don't realise the extra Interest paid...
My view is that early repayment does not affect the returns or risk. If you accept a certain risk/returns and if the loan is repaid early then you can always invest the proceeds into a similar loan.
Under the original fee structure, early repayment hurt. Not so much now but there is still a re-investment lag. Just to confirm. Your figures represent the average age at which early repaid loans were repaid rather than average loan life? I think that must be the case.
Forgot to say, I think the remainder of the original cohort will become a bit more risky with these early repayments as they are prior to the default peak and thus the bad loans are less diluted.