P2P = peer to peer = person to person = individual with money to lend lending to individual needing money? Not a bank in the middle.
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P2P = peer to peer = person to person = individual with money to lend lending to individual needing money? Not a bank in the middle.
Maybe on the platform, perhaps investors who are companies should be restricted to lending to borrowers who are companies?
I think it is a stretch to say that Heartland Bank as an investor on the Harmoney platform is a peer of the many borrowers in whom it invests.
Heartland itself has depositors and it is they who would be the peers to the Harmoney borrowers. Heartland itself "clips the ticket" on the funds that pass from its depositors to the borrowers on the Harmoney platform.
It could even be said that Harmoney is discouraging smaller peers on the investing side by charging higher lender fees for those with under $50,000 invested through the platform.
I am not sure what definition of "peer" is appropriate in this context but this is what I think it normally means:
Definition of "peer" a person who is the same age or has the same social position or the same abilities as other people in a group
http://dictionary.cambridge.org/dictionary/english/peer
Disc: I have shares in HBL.
5 Months in ($100K added, no withdrawals):
Total Loans: 1,216
Overall Avg: $92.17
Paid Off: 50 (4.1%)
Arrears:
1-30 10 (0.82%)
31-60 7 (0.58%)
61-90 1 (0.08%)
91-120 0
Total Value increase (after tax and fees): $5,139.74
Attachment 9096
XIRR value is after tax and fees.
ADXIRR = XIRR less total value of arrears 31-60 days or above.
Attachment 9097
RAR still rising but slowing.
Returning $53.49 per day.
With compounding at current rates, expected values:
$226,208.90 in 5 years
$486,690.05 in 10 years
5 months in has yet to show up any write offs. I predict that 12 months out from now your XIRR will be closer to 10%.
But the new interest rates will put a dampener to the returns, so assuming a high churn rate of 8 to 10% a month with no new investments, the RAR could drop to just around or below 14%.
I'm predicting (at the moment), 15.3% - rates have changed but I'll be moving my investment band, so it's a bit tough to predict anything now...
Note: This is with compounding, i.e. all returns are reinvested, it's not a static 100K (currently 105K), so I think 10% is well below likely returns - my thoughts only.
Just working it through a bit...
Since it took me a little over 3 months to invest the 100K, lets put the investment equivalent time at 4 months. So at current return I should have 15K clear at 12 months less defaults. To only get 10% I'd have to have 50 new (full) defaults (rounding up to $100 per loan) - but since almost all loans have already returned 4 months of interest/principle, I'd have to be looking at, at least 75 defaults. That's 7.5% pa defaults. My average Harmoney suggested default rate is 1.59%, even if you double that it's not close to 7.5%...
I'm in a unique position to know exactly what has gone in and am not adding or drawing funds, so come 12 months it will be interesting to see where it's ended up.
Good effort getting 100k invested in such a short time. I have only managed to get 15k in 3 months. I'm 80% going for 36 month loans however.
and now looking at only C and D grade