Harmoney

[joker]

No jump for me. My recoveries are currently sitting at 1.25% of charged off principal.

How is everyone else looking?

Big jump in recoveries in the last week or so.

Charge-offs = 11.6% of gross interest
Recoveries = 6.6% of charge-offs

I haven't invested for over 2 months and am winding down my loan book with Harmoney completely due to the lack of loans, the poor quality of many borrowers, the questionable loan details that Harmoney provides and the time and effort necessary to find loans and vet them for investing. The returns are not worth the effort.

[RMJH]

I suspect harmoney allocates more to institutions because harmony receive more fees from those loans. Hence why the wholesale RAR is lowest. Would retail investors accept a greater share of the loans in exchange for higher fees?

I would accept higher fees if it meant less cash sitting idle. I bet the wholesale investors don't have over 10% of their investment sitting as cash.
It's a bit of a Catch 22 situation because if you withdraw the cash you end up with no autolends. Manual lending is virtually impossible now.
I think it may be time for a simple queue system like at Zopa. First in first out. But no picking other than broad risk bands.

[myles]

I would suggest caution on accepting a reduced rate (via increased fees, reduced rates etc) within the Harmoney lending model (does not apply to others). The risks are higher with Harmoney. These are unsecured loans (that is why the default rates are high)! If there is an upward shift in interest rates or some other significant shift/shock to the economy the effect will be felt here more than elsewhere. That is why the rates are higher here - the risk is higher. If fees increase or rates reduce, alternative investment options would likely be a better choice.

As an example: The difference between wholesale and retail is currently a little over 3%, take that 3% away from the returned interest rate of A grade loans and then compare that to a fully secured term deposit

Be careful what you wish for...

[Aaron]

Has anyone used Southern Cross Loans & Investments?

6.25%-8% Short Term Property lending with first mortgage over the property. Sounds good but there must be a catch. I assume it is the ability of the borrowers to repay but how could that be a problem if you have a first mortgage?

Southern Cross take a 2.5% margin which equates to 8.75 to 10% for the borrowers.


This may have been discussed earlier in the thread but it is a long thread.

[Cool Bear]

......

Be careful what you wish for...

YES..
Myles, that is exactly what happen a couple of years ago.

Initially, HM fees were just 1.25% of all repayments (principal and interest). As that also applies to early repayment, many here complain about it being unfair as HM takes the 1.25% of the total loan even when the borrower pays back after just a month or two. Some here asked for fees as a fixed percentage of gross interest instead. I was okay with the charges then as even with early repayments, the fees works out to just about 5 to 8% of gross interest.

Their wish came true and HM changed the fees calculation to the present very high 15 to 20% of gross interest.

[beacon]

I would suggest caution on accepting a reduced rate (via increased fees, reduced rates etc) within the Harmoney lending model (does not apply to others). The risks are higher with Harmoney. These are unsecured loans (that is why the default rates are high)! If there is an upward shift in interest rates or some other significant shift/shock to the economy the effect will be felt here more than elsewhere. That is why the rates are higher here - the risk is higher. If fees increase or rates reduce, alternative investment options would likely be a better choice....

Point taken, Myles, but I'm already having to look for alternative investment options. With such a choke in loan volume, I've recently withdrawn yet another 10% of my total capital with Harmoney.

[beacon]

Has anyone used Southern Cross Loans & Investments?

6.25%-8% Short Term Property lending with first mortgage over the property. Sounds good but there must be a catch. I assume it is the ability of the borrowers to repay but how could that be a problem if you have a first mortgage?

Southern Cross take a 2.5% margin which equates to 8.75 to 10% for the borrowers.


This may have been discussed earlier in the thread but it is a long thread.

Checked a few times. Never saw a loan over 7.2% pa. Website had no place to place orders. Messages left on phone number were rarely returned. So, looked no further...

[myles]

Has anyone used Southern Cross Loans & Investments?

My memory is a bit vague on this, but I thought they originally had something like a $100,000 buy in? I could be wrong on that.

Now listing a minimum $10,000 investment - so that may still be an issue for some.

[Aaron]

Checked a few times. Never saw a loan over 7.2% pa. Website had no place to place orders. Messages left on phone number were rarely returned. So, looked no further...

Thanks for that 7.2% with a first mortgage as security doesn't sound too bad.
And thanks Myles, still looking like a good option, I may look a bit closer.

[RMJH]

I would suggest caution on accepting a reduced rate (via increased fees, reduced rates etc) within the Harmoney lending model (does not apply to others). The risks are higher with Harmoney. These are unsecured loans (that is why the default rates are high)! If there is an upward shift in interest rates or some other significant shift/shock to the economy the effect will be felt here more than elsewhere. That is why the rates are higher here - the risk is higher. If fees increase or rates reduce, alternative investment options would likely be a better choice.

As an example: The difference between wholesale and retail is currently a little over 3%, take that 3% away from the returned interest rate of A grade loans and then compare that to a fully secured term deposit

Be careful what you wish for...

I get all that and don't touch anything below A5 or above D5. But with 10% cash being the minimum to get any loans you may as well accept slightly higher fees and have all your money invested. It may also help maintain diversification and grow a portfolio.