Welcome back from Harmoney and we hope you have a prosperous 2019. Meanwhile, here's another $140 of loan charge-offs for you!...Just what I needed!!!
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Welcome back from Harmoney and we hope you have a prosperous 2019. Meanwhile, here's another $140 of loan charge-offs for you!...Just what I needed!!!
Coming up to my 4th Anniversary in March.
1985 Loans Total; 101 Loans in E&F, Charge offs running at 17 Loans per 100 (2 Loans Left). 1884 Loans in A_D, Charge-offs running at 2 Loans per 100.
$$Charged off vs Gross Interest received to Date= 14.0850%
Happy new year everybody! My investments have started in relatively good shape, albeit $100 sitting at 120-180 days and a further $125 at 90-120 which looks set to quash the RAR. Went overseas for 40 days, and my portfolio holdings fell back by 5% ($4000), but fortunately have been able to recover that in the past 10 days.
Added a chart that are interesting for me, may be for others. Charts net interest earned against the outstanding principal value of arrears from HM. For reference also included my RAR stats and outstanding principal from all P2P
Attachment 10256
Attachment 10257
Are we at a point in history that could be labelled 'The Debt Crisis'? Or is it another 20 years off?
This is just a topic for discussion if anyone is interested. I'm at a loss as to where this is all heading, I don't think we've seen anything similar before. So many of the younger generation are now so heavily exposed to debt that I can't see how they will ever be able to rise above it. They seem to have the attitude of live now and don't worry about the future.
Looking at the loans that go through Harmoney, it appears to me that this is spreading up the generations, with more and more 'older' people going further into debt rather than the historical progression of getting out of debt as we age. If house values fall (as it appears they are beginning to - certainly in some areas of Aus and NZ) it will significantly add to the problem.
The Australian Govt. appear to be very concerned as it's more prevalent over there, but I don't think they know what to do about it. The NZ Govt. recently brought in restrictions on excessively high rates on personal loans - is that enough?
Does anyone have a crystal ball view of what the future might hold?
This may not be the right area to post this, but I think those investing in P2P have a different perspective than others may have and that is the perspective I'm more interested in.
No crystal ball but the property market has always had cycles of boom, consolidation and correction. NZ home ownership rates are falling with first home owners having to wait longer as they need to save longer for deposits and requiring bigger debt (house prices have increased more than both inflation and incomes) to buy into housing. The goal of becoming mortgage free by age 60 is becoming more unattainable consequently older people are more indebted compared with previous generations.
I think that a big difference between NZ and Australia is that Australian households have more of their wealth (both absolutely and in percent terms) in financial and pension fund assets. NZers rely more on real estate (both owner-occupied and investment real estate.)
Wealth (which is mostly real estate wealth in NZ) is also becoming less evenly distributed. 8% of NZ households have 40% of NZs mortgage debt. Add to this the fact that the IMF has said NZ household debt is too high, then there is bit of an UXB (unexploded bomb) waiting for a vibration to be felt.
It is these heavily indebted households that would be particularly susceptible to any economic downturn or whenever interest rates rise from historic lows. However the ripples would be felt throughout the residential property market and have an effect on the retirement assets for many NZ households.
https://www.stuff.co.nz/business/mon...-mortgage-debt
https://www.newsroom.co.nz/2018/04/1...-high-says-imf
Having come over from Aus, I can attest that the compulsory Australian pension (superannuation) is one of the better choices made. Being able to access KiwiSaver early, I think, will always be problematic - time will tell.
A great read if anyone is interested:
Household Debt And Financial Stability - IMF
Some great data for comparison:
IMF DataMapper - US, UK, AU, NZ Debt/GDP
Another source of good comparative info:
Trading Economics
Perhaps this is to 'heavy' of a conversation for this thread.
Will share my thoughts, as had previously done some research on this for a presentation I did late last year.
P2P falls under consumer debt. The RBNZ statistics provides a breakdown between M1 (Consumer loans) and M2 (Housing loans) in its Household Balance sheet (see attached). It reflects that M2 has nearly quintupled over the past 20 years, while M1 has only doubled. From the peak of the GFC (approx Sep18), M1 has only increased by 20% whereas housing loans are 60% up. Infact housing loan lending INCREASED during the GFC!!!
In the Key household financial stats (interest on consumer loans (D2) and housing loans (D1)), the observable trend contradicts the above. And both consumer and housing loans follow the same trajectory since the GFC peak. The impact of successive interest rate reductions.
Interest rate increases will cause cataclysmic chaos for those holding housing loans, the focus of IMF risk. Consumer debt defaults will be impacted, particularly lender holding distressed housing assets... However history demonstrates that mortgage defaults during the GFC was higher that of credit card debt. Which could indicate that lenders valued their unsecured debt/availability over their distressed assets?
As investors believe that the most we can do is position ourselves given the current economic environment. I consider P2P investment as a defensive option, and believe returns will outstrip real estate investment and sharemarket loans over the medium term irrespective of when and if a recession occurs.
Attachment 10263
Attachment 10264
I asked this question over on the LC forum over 2 weeks ago and got no replies!
As it is in the same notion as this thread I'll ask again here, now :)
So what do you think is the largest 'Threat' to our investments in P2P within NZ?
I've just been mulling this over, especially with another World Economic crisis breathing down everyone's necks!
Well my take and penny worth is this > Personal Bankruptcies > Personal Borrowers that go 'Belly Up' ( Mortgage, Car Loan, P2P Loan etc )
Where P2P Borrowers decide the pain is not worth the gain.... So allow themselves to be taken through the Bankruptcy process.
Agree. The housing (real estate) situation is a major concern for NZ.
My question was more focused on the increasing amount of debt, rather than what happens if... I don't believe it can continue to grow without a significant shift at some stage. The 'what happens if', may be the trigger. The whole economic meaning and value of money seems to be changing. Will you be considered wealthy in the future if you have less debt than someone else???
Somehow the money of the few needs to be disbursed back to the many?
Where is that Robin Hood character when we really need him?