Harmoney

[reacher]

Hi FIsaver, are these statistics from your own spreadsheet or something Harmoney has provided?

[FIsaver]

Hi FIsaver, are these statistics from your own spreadsheet or something Harmoney has provided?

It was off their marketplace stats page - http://harmoney.co.nz/assets/Perform...975.1473978243


third column is me just taking the (average return - average loss)

[alistar_mid]

Are E loans the best out there?

I was recently looking at Harmony's average return per grade and taking into account the loss what the actual rate of return is (at a given snapshot in time).

How are the overseas P2P market's going? NZ's harmony seems to be rocking - are we just late to the game? What are the general rates of return for other P2P companies in comparison?

	average return PY	average loss PY	average total return PY
A	11.87%	0.17%	11.70%
B	15.15%	0.53%	14.62%
C	20.86%	1.20%	19.66%
D	27.25%	2.00%	25.25%
E	35.20%	4.28%	30.92%
F	39.63%	10.62%	29.01%

yep, I have done extensive financial modelling on harmoney and this the same conclusion i came to - although working this out is pretty easy

[reacher]

yep, I have done extensive financial modelling on harmoney and this the same conclusion i came to - although working this out is pretty easy

Do you think you can decrease the average loss of an F loan using some of the filters in Auto Lend? Thereby improving the average total return?

The main filter I like to look at is loan repayment to income as I feel this is a key factor in successful loan repayment. What are other peoples thoughts? I am sure Harmoney has data on reducing the risk of all graded loans based on different filters.

[BJ1]

yep, I have done extensive financial modelling on harmoney and this the same conclusion i came to - although working this out is pretty easy

Have a look at the individual default estimates per risk grade sub-category. F1 offers the highest return @ 32.26% and after that the returns decline; I guess because Harmoney has limited itself to charging under 40% and thus the loan rates are squeezed in F Grade to the extent that F2-F5 don't generate the net return warranted by the risk. They'd have to charge 50% to cover the estimated F5 default risk. That suggests that retail investors seeking to maximise return should leave F2-F5 to the wholesale players.

[XxOrooxX]

Have a look at the individual default estimates per risk grade sub-category. F1 offers the highest return @ 32.26% and after that the returns decline; I guess because Harmoney has limited itself to charging under 40% and thus the loan rates are squeezed in F Grade to the extent that F2-F5 don't generate the net return warranted by the risk. They'd have to charge 50% to cover the estimated F5 default risk. That suggests that retail investors seeking to maximise return should leave F2-F5 to the wholesale players.

I agree. There is also a possibility that, in an environment where loans cant be generated fast enough, Harmoney could become more lax on their grading. i.e. accept more unacceptable loan applications into the last F grade and just push everything up the grading system slightly to avoid screwing with their "effective" rating system and risk allocation model while still maintaining loan volumes. I stay away from F grades for now. Thoughts?

[Finite]

I agree. There is also a possibility that, in an environment where loans cant be generated fast enough, Harmoney could become more lax on their grading. i.e. accept more unacceptable loan applications into the last F grade and just push everything up the grading system slightly to avoid screwing with their "effective" rating system and risk allocation model while still maintaining loan volumes. I stay away from F grades for now. Thoughts?

With the small number of loans in the market place these days, Harmoney have every incentive to adjust their models to allow more borrowers in.
When the numbers are reduced enough to seriously threaten their business model they most certainly will.
After all, its not their money at risk. And short term survival overrides long term reputation considerations.

[alistar_mid]

Have a look at the individual default estimates per risk grade sub-category. F1 offers the highest return @ 32.26% and after that the returns decline; I guess because Harmoney has limited itself to charging under 40% and thus the loan rates are squeezed in F Grade to the extent that F2-F5 don't generate the net return warranted by the risk. They'd have to charge 50% to cover the estimated F5 default risk. That suggests that retail investors seeking to maximise return should leave F2-F5 to the wholesale players.

Oh right, haven't quite looked at it at that level but i think I stick in the average time to default for each loan. But yeah, that sounds about right

[Art]

FIsave, I have been investing with Harmoney for about 18 months, but 3/4 of my funds went in about 8 months ago. These are my statistics top row is A's, second row B's etc. Net interest being gross less fees and charge-offs:

spread of net interest	spread of investments	Difference
14%	20%	-6%
33%	40%	-7%
16%	15%	1%
14%	10%	4%
16%	10%	6%
6%	5%	1%

Probably too early to tell yet since write-offs are apparently loaded towards the first 18 moths of a loan, but looking like F's aren't worth the risk, A's and B's under perform in a buoyant economy (but what would happen in a recession?) and E's give the best return. But still early days yet for my statistics.

[BJ1]

I wonder why Harmoney has changed the RAR information as at it's latest update, appeared this morning. No longer two RARs, Retail and Platform, but now just platform.