yep, RAR and filters stable but cash is growing again!
Printable View
yep, RAR and filters stable but cash is growing again!
Indeed, I am too. RAR falling, have had to extract more than half my (peak) funds now, since there has been little opportunity to deploy them on this platform in recent months. Checking it is becoming a waste of time.
Thank you Harmoney and Institutionals for usurping my share...
Having only recently joined Harmoney, I am at a different stage in the cycle than many of the established commenters here. I am so recent I don't even had a RAR yet!
Before investing, I read your whole thread, as I found it to be the most informative and impartial piece of information on HM anywhere on the web. It seems to me also that you guys thought the best days of HM were a few years ago. That's no good to me :rolleyes: but I'll still plough on regardless. Currently reinvesting any interest and principal paid back, checking daily, one $25 note at a time...
Anybody else having login issues this morning? My email & password (saved in LastPass) apparently don't match, and the forgot password page is down.
Edit: Seems it was a very temporary thing, or I hit the end of it. App & website now both working.
Harmoney is proposing a new scorecard (v1.6), got an email yesterday about it. Rates charged to borrowers are much reduced in grades C, D and E, a bit reduced in Bs and Fs, and unchanged in As.
The amount they can borrow will also change: Fs will be able to borrow up to $15k, Es up to $25k, Ds up to $35k, Cs up to $45k, Bs up to $55k and As unchanged at $70k.
grade old rate new rate variance old limit new limit
-----------------------------------------------------------------
A1 6.99% 6.99% NIL $70,000 $70,000
A2 7.99% 7.99% NIL $70,000 $70,000
A3 9.20% 9.20% NIL $70,000 $70,000
A4 10.50% 10.50% NIL $70,000 $70,000
A5 11.99% 11.99% NIL $70,000 $70,000
B1 13.39% 12.39% -1.00% $55,000 $50,000
B2 14.75% 12.59% -2.16% $55,000 $50,000
B3 15.80% 12.80% -3.00% $55,000 $50,000
B4 16.99% 13.99% -3.00% $55,000 $50,000
B5 17.80% 14.80% -3.00% $55,000 $50,000
C1 18.90% 15.90% -3.00% $45,000 $40,000
C2 20.40% 17.40% -3.00% $45,000 $40,000
C3 21.90% 17.59% -3.00% $45,000 $40,000
C4 22.99% 17.99% -5.00% $45,000 $40,000
C5 23.99% 18.49% -5.50% $45,000 $40,000
D1 24.70% 18.99% -5.71% $35,000 $30,000
D2 25.20% 19.49% -5.71% $35,000 $30,000
D3 25.49% 19.99% -5.51% $35,000 $30,000
D4 25.99% 20.99% -5.00% $35,000 $30,000
D5 26.49% 21.49% -5.00% $35,000 $30,000
E1 26.99% 21.99% -5.00% $25,000 $20,000
E2 27.49% 22.49% -5.00% $25,000 $20,000
E3 27.99% 23.99% -4.00% $25,000 $20,000
E4 28.29% 24.29% -4.00% $25,000 $20,000
E5 28.69% 24.69% -4.00% $25,000 $20,000
F1 28.99% 26.99% -2.00% $15,000 $10,000
F2 29.19% 27.99% -1.20% $15,000 $10,000
F3 29.49% 28.99% -0.50% $10,000 $15,000
F4 29.69% 29.69% NIL $10,000 $15,000
F5 29.99% 29.99% NIL $10,000 $15,000
New scorecard and details here. HM also says that a new C3 will not be an old C3, hence why the rates were adjusted.
I find the rate drop in Cs and Ds quite drastic - it will be hard to go and chase the 20%+. I guess it depends on an individual investor's strategy. Personally, I was quite content to stay B5 to D3, but to achieve reasonable returns of, say, 17-18%, I will either have to go "deeper" to the mid Es, or to forgo As and Bs and reduce diversification and solely focus on C1 to D5 or thereabouts.
Food for thought...
Harmoney is proposing a new scorecard (v1.6), got an email yesterday about it. Rates charged to borrowers are much reduced in grades C, D and E, a bit reduced in Bs and Fs, and unchanged in As.
The amount they can borrow will also change: Fs will be able to borrow up to $15k, Es up to $25k, Ds up to $35k, Cs up to $45k, Bs up to $55k and As unchanged at $70k.
grade old rate new rate variance old limit new limit
-----------------------------------------------------------------
A1 ... 6.99% .. 6.99% . NIL .... $70,000 . $70,000
A2 ... 7.99% .. 7.99% . NIL.... $70,000 . $70,000
A3 ... 9.20% .. 9.20% . NIL .... $70,000 . $70,000
A4 ...10.50% ..10.50% . NIL .... $70,000 . $70,000
A5 ...11.99% ..11.99% . NIL .... $70,000 . $70,000
B1 ...13.39% ..12.39% .-1.00% .. $55,000 . $50,000
B2 ...14.75% ..12.59% .-2.16% .. $55,000 . $50,000
B3 ...15.80% ..12.80% .-3.00% .. $55,000 . $50,000
B4 ...16.99% ..13.99% .-3.00% .. $55,000 . $50,000
B5 ...17.80% ..14.80% .-3.00% .. $55,000 . $50,000
C1 ...18.90% ..15.90% .-3.00% .. $45,000 . $40,000
C2 ...20.40% ..17.40% .-3.00% .. $45,000 . $40,000
C3 ...21.90% ..17.59% .-3.00% .. $45,000 . $40,000
C4 ...22.99% ..17.99% .-5.00% .. $45,000 . $40,000
C5 ...23.99% ..18.49% .-5.50% .. $45,000 . $40,000
D1 ...24.70% ..18.99% .-5.71% .. $35,000 . $30,000
D2 ...25.20% ..19.49% .-5.71% .. $35,000 . $30,000
D3 ...25.49% ..19.99% .-5.51% .. $35,000 . $30,000
D4 ...25.99% ..20.99% .-5.00% .. $35,000 . $30,000
D5 ...26.49% ..21.49% .-5.00% .. $35,000 . $30,000
E1 ...26.99% ..21.99% .-5.00% .. $25,000 . $20,000
E2 ...27.49% ..22.49% .-5.00% .. $25,000 . $20,000
E3 ...27.99% ..23.99% .-4.00% .. $25,000 . $20,000
E4 ...28.29% ..24.29% .-4.00% .. $25,000 . $20,000
E5 ...28.69% ..24.69% .-4.00% .. $25,000 . $20,000
F1 ...28.99% ..26.99% .-2.00% .. $15,000 . $10,000
F2 ...29.19% ..27.99% .-1.20% .. $15,000 . $10,000
F3 ...29.49% ..28.99% .-0.50% .. $15,000 . $10,000
F4 ...29.69% ..29.69% . NIL .... $15,000 . $10,000
F5 ...29.99% ..29.99% . NIL .... $15,000 . $10,000
New scorecard and details here. HM also says that a new C3 will not be an old C3, hence why the rates were adjusted.
I find the rate drop in Cs and Ds quite drastic - it will be hard to go and chase the 20%+. I guess it depends on an individual investor's strategy. Personally, I was quite content to stay B5 to D3, but to achieve reasonable returns of, say, 17-18%, I will either have to go "deeper" to the mid Es, or to forgo As and Bs and reduce diversification and solely focus on C1 to D5 or thereabouts.
Food for thought...
While I have not enquired for a while, I have not found any NZ P2P providers that accept children. Like you I wanted to invest on behalf. Does anyone have any ideas about WHY the P2P lenders wouldn't accept children? Is there a legal reason? Or is it just a hassle to set up and associate the responsible parent etc? Quite a few managed funds have accepted his money and tax bracket.
Ah, I think you are not comparing to 1.5! The rate reductions are much less... but shows how much times have changed since launch
Unfortunately, he IS comparing to 1.5 and it is that drastic!!
Worst still, the default rate is up for C4 to E5. For example under 1.5, E2 interest rate is 27.49% and annual chance of default is 3.73%. Under 1.6, E1 interest is now 22.49%, a drop of 5% while the annual default has gone up to 5.56%.
So we are being hit both ways! RAR will definitely drop. But with Reserve bank interest rate approaching zero, it is rather expected.
Regards
CB
I think that's what is driving the interest rates drop from a commercial point of view. I am guessing that most lending institutions (including banks) have had to drop their rates. And (for those of use with mortgages) while we are happy for our mortgage rates to drop down to 3.45% or thereabouts, this also means that borrowing rates across the board are also dropping.
Because as Cool Bear says, a drop in the interest rate for a particular grade doesn't mean that it has less chance of default as before, comparatively. A similar chance of default percentage now corresponds to a lower interest rate, so we lenders are being ask to risk more for the same return.
Interestingly, Harmoney also claims that they now have more than 5 years worth of data regarding risks and are now able to fine-tune their expected default rates, risk analysis etc. That may be true also?
Worked out the net impact on my current portfolio. My current weighted average interest rate on loans is 20%... superimposing new interestrates on revised dashboard it will be 17%
As per coolbear comments above, default rates unlikely to have changed in the last 2 years... that 3% reduction just a full hit to investor return.
I wonder how the insto's feel about the drastically reduced income with practically no change to the underlying risk?
Do you not feel that consumer finance in the unsecured space has a degree of inelasticity of demand?
Recall Myles mentioning Gem charging AER of 49%; and the unregulated loan shark shops continue to be a problem. OCR hasn't fallen off a cliff, its reduced by 0.75% in 3 years.
Intrigued what prompted harmoney to go this hard in their reduction. If they are supposedly making "no money" off loan applications; and investing their own money into the platform? Maybe the insto's are happy with 7% RAR instead of 10%, wonder how they'll like it when the market tanks.
I agree - I was aiming for a weighted average lending rate of around 20%, which put me at a C2 "centerpoint". I will now have to get down to a D5 (!) centerpoint, which obviously carries a lot more defaults risk. I too think the reduction in rates are drastic. Down 5% in some grades is not fine-tuning, it's a complete change of tack.
No problem - actually my new centerpoint is D3, not D5. Still a big step down from C2.
Toukshare,
You may find the following two charts of interest - these are my current loan distribution and all time defaults (ignoring grades with small loan numbers):
Attachment 10821
Attachment 10822
Using Harmoney platform average default rates can be well off if you apply any form of 'sane' selection process to your loans. It should be pretty obvious why I favour D's and E's when I can get them. Lower grades may not necessarily be lower risk. Hard to compare when everyone's selection process is different. ;)