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Thread: Harmoney

  1. #2461
    yeah, nah
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    Pre August 2017 Post August 2017
    Grade Default Rate Interest Rate Default Rate Interest Rate
    A1 0.08% 9.99% 0.05% 6.99%
    A2 0.13% 11.46% 0.10% 7.99%
    A3 0.16% 12.03% 0.11% 8.99%
    A4 0.21% 12.63% 0.12% 9.99%
    A5 0.27% 13.25% 0.14% 10.99%
    B1 0.32% 13.84% 0.16% 12.49%
    B2 0.42% 14.49% 0.18% 13.49%
    B3 0.54% 15.16% 0.21% 14.49%
    B4 0.63% 15.80% 0.25% 14.99%
    B5 0.74% 16.48% 0.30% 15.49%
    C1 0.86% 18.52% 0.37% 16.49%
    C2 1.04% 19.67% 0.46% 17.49%
    C3 1.19% 20.82% 0.56% 17.99%
    C4 1.39% 22.06% 0.71% 18.99%
    C5 1.51% 23.23% 0.89% 19.49%
    D1 1.53% 24.41% 1.14% 20.49%
    D2 1.79% 25.80% 1.44% 21.49%
    D3 1.95% 27.12% 1.80% 21.99%
    D4 2.21% 28.70% 2.19% 22.49%
    D5 2.50% 30.24% 2.63% 22.99%
    E1 2.78% 31.81% 3.15% 23.99%
    E2 3.52% 33.95% 3.73% 24.92%
    E3 4.11% 35.33% 4.41% 25.60%
    E4 4.95% 36.64% 5.13% 26.27%
    E5 6.05% 38.25% 5.87% 26.95%
    F1 6.96% 39.22% 6.62% 27.63%
    F2 8.36% 39.36% 7.38% 28.31%
    F3 9.79% 39.61% 8.09% 28.98%
    F4 12.63% 39.98% 8.79% 29.66%
    F5 15.38% 39.99% 9.50% 29.99%

  2. #2462
    yeah, nah
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    Not much difference on the A end - really just a shift to accommodate some lower interest quality loans. Example: An old A1 is very similar to a new A4.

    However, the F end is significantly different and lenders will be taking significantly more risk for a similar return! Example: An old E3 with default rate of 4.11% and 35.33% interest moves to the new E3 at 4.41% default rate (small change) and only 25.60% interest (large change).

    Added: This could be a reflection of not having the old default rate for the F end right and this change is the real story with little change in the real current risk?

    Example: An old D5 with a 'suggested' current default rate of 2.5% (interest ~30%) really has a default rate of 9.5% (a new F5 with interest ~30%).
    Last edited by myles; 27-07-2017 at 07:45 PM. Reason: Added:

  3. #2463
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    Quote Originally Posted by RMJH View Post
    Happy to meet the market but the supporting material is a bit puzzling to me on first read. I don't see how reduced risk of default could account for a reduction from 9.99% to 6.99%. What I would like to see is a table of old and new rates side by side. Goodness knows why that wasn't included in the email. Smacks of PR not openess. Personally I would rather be given the economic realities not spin. Stated 0.6% reduction in RAR doesn't feel right.
    I reckon my RAR will be affected by about 2% or more equating to many thousands of $ a year in net interest for me.

  4. #2464
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    Quote Originally Posted by myles View Post
    Not much difference on the A end - really just a shift to accommodate some lower interest quality loans. Example: An old A1 is very similar to a new A4.

    However, the F end is significantly different and lenders will be taking significantly more risk for a similar return! Example: An old E3 with default rate of 4.11% and 35.33% interest moves to the new E3 at 4.41% default rate (small change) and only 25.60% interest (large change).

    Added: This could be a reflection of not having the old default rate for the F end right and this change is the real story with little change in the real current risk?
    Yes, I notice too when I compared the defaults and interest rates earlier that while the interest rates drops a lot for D5 to E4, the default rates actually goes up! not down. I supposed the old defaults rates for those grades were too low as my experience shows.

  5. #2465
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    According to this Harmoney job advert they have 5 collections officers and are looking to employ a sixth. https://www.seek.co.nz/job/34000229

  6. #2466
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    Default Past experience and all data now useless!!

    What bugs me about this is that I have been trying to build up a great database (6000) loans and had done many analysis - eg analyse all loans for the year 2006 (2260 loans) by grades (A1 to F5) for defaults, interest received, %age repaid, etc etc. The objective was to determine, as time goes by, which grades are the best to invest in without diluting the results with new loans.

    With this change, all those data and knowledge are rather useless. As Harmoney states " This means that a borrower that was a C3 on the old scorecard is unlikely to be a C3 on the new scorecard"

  7. #2467
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    overall I'm pleased that Harmoney is looking to improve their credit model. However I suspect rewrites may spike for those who can now access lower interest rates

  8. #2468
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    Quote Originally Posted by Wsp View Post
    overall I'm pleased that Harmoney is looking to improve their credit model. However I suspect rewrites may spike for those who can now access lower interest rates
    Could be an opportunity to get out of some of those more risky loans - before they default - glass half full view...but I suspect the more risky loan borrowers will have nowhere to re-negotiate a loan to?

  9. #2469
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    Quote Originally Posted by myles View Post
    Not much difference on the A end - really just a shift to accommodate some lower interest quality loans. Example: An old A1 is very similar to a new A4.

    ... Example: An old E3 with default rate of 4.11% and 35.33% interest moves to the new E3 at 4.41% default rate (small change) and only 25.60% interest (large change).
    I look at it as you do in your E3 example, ie. what's the change in interest rate for a given default rate. For default rates from 0.16% to 1.14% the interest rate is higher now.

    Does anyone know the formula to calculate the effective interest rate given the actual interest rate and the default rate? It would be interesting to see what that says about the old and new rates.

  10. #2470
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    Will not the finance companies like GEM Visa and trading banks providing personal loans be shuddering in their boots?

    Borrowers with any reasonable credit history will look to dump these excessive interest rates like GEM with 29.95% for everyone.
    I think I will find my exclusive B3 to D4 investments will give me a good return as now of 14.55% and climbing as I gradually dump A,E,F grades

    permutation grade spread.JPG
    Last edited by permutation; 27-07-2017 at 10:23 PM. Reason: graph added

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