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Originally Posted by Investor
Your RAR is supposed to fall over time as more defaults naturally occur. Depending on your fee & tax rate, it is still possible to obtain a return of 12% p.a. after fees, tax and Harmoney's predicted default levels.
Indeed Investor, at 15% fees, less than 4% default and low-mid income tax rates. For someone on higher tax rates, 12% net of all these is now an unsustainable dream. Scorecard 1.5 squeezed gross rates, and arrears and defaults continue to rise disproportionately into the tail end of their hazard curve. Justification given for lender margin squeeze was safer, tightly screened borrowers. I haven't seen that coming through yet, but then its only been 4 months since August. Next year's Harmoney performance will be crucial, especially with competition keeping arrears and defaults manageable.
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