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Thread: Harmoney

  1. #2801
    yeah, nah
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    I'm currently at 7.6% return for 6 months i.e. ~ 15.2% for 12 months after tax (lowest rate). This includes a startup period of a little over 3 months to invest $100K (so it should improve). I know I've got some significant losses to come as more defaults kick in but my returns are looking to be significantly higher... XIRR at just under 18% (after tax) - very consistently, current RAR at 17.35%pa. Compounding with the lower tax rate makes a significant difference to the overall returns.

    If you are investing new money or drawing on returns a simple balance comparison will not give you an accurate picture of your returns (using XIRR will).
    Last edited by myles; 17-10-2017 at 10:55 PM.

  2. #2802
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    Quote Originally Posted by joker View Post
    Harmoney retail RAR has been trending down for sometime now. Currently 13.07% (lowest since mid-2015) and heading toward the 12s. Scorecard 1.5 starting to bite?
    Attachment 9234
    Maybe but also the continued dilution of the original (capital based fee) loans will hit retail returns. My returns have dropped a little under 0.5% even though I no longer invest in A's.

  3. #2803
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    Also writeoffs as a % of interest are creeping up (for me) and it is too early for this to be from recent shift in grade mix.

  4. #2804
    yeah, nah
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    An increase to the minimum wage from the incoming Govt. may improve existing borrowers ability to pay off debt, perhaps reducing defaults?

    Anyone see any major positive/negatives for P2P Lending from the incoming Govt.?

    Does a falling NZD effect P2P lending? (More expensive to purchase from OS so perhaps local small businesses could do better - some are P2P borrowers).

  5. #2805
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    This from Zopa relates to UK but found it interesting all the same.

    Update on Zopa investing
    Since 2010 the UK has seen continually improving consumer credit performance leading to historically low levels of bad debt.
    In early 2016, we at Zopa started to see some early signs of a possible change in this trend. It now looks like the change is real:

    Publicly available data suggests consumer default and insolvency levels are reaching levels which are more consistent with historic norms prior to 2010; and
    The Bank of England in their credit conditions survey stated “Lenders reported that default rates on both credit cards and other unsecured lending to households were reported to have increased significantly in Q2 [of 2017].”
    While we are not immune to this industry-wide trend, the impact on lending at Zopa is limited. This is because we identify and focus on low risk borrowers, we have been cautious in our underwriting in anticipation of increases in default rates, and, since early 2016 in response to very early indications, have been more and more cautious in our lending criteria.

    More recently, we have reduced the amount of lending in our higher risk, higher return D-E markets (which are included in the Plus product). We are also taking steps to attract more lower risk customers thus increasing the proportion of A and B rated loans.

    What this means for new investments
    As a result of the increasing proportion of lower risk, lower return loans we expect to approve, we are expecting a lower targeted return of 4.5% for new investments in Plus. Similarly, the targeted return for new investments in Core will be 3.7% reflecting a shift towards lower risk loans in the A-C markets.

    It is important to note that the target average return levels for new investments in each risk market (A–E) have not changed materially. The change in overall return is a result of changes in mix. For example, the proportion of D and E loans in the Plus product would go from 30% until now, to 10-15% in the future.
    What this means for existing investments
    For existing loans, we are expecting slightly higher losses. For existing investments in Safeguarded loans, we expect no impact on loans as Safeguard coverage is expected to remain above 100% (including future contributions).

    In addition to changes in loss expectations, we are also seeing an increase in early repayments from borrowers. While this means that investors get their money earlier, it also reduces interest income and thus returns.

    If these trends in early repayment rates and credit losses continue, we would expect that for existing investments in non-Safeguarded loans originated up to August 2017, realised returns will be lower than original expectations: 3.5% compared to 3.9% in Core and 5.6% compared to 6.3% in Plus.

    A

  6. #2806
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    Quote Originally Posted by darrenc View Post
    I'm down from high 16s to 14.99% this morning. It's taken 2 months to drop that quickly. That's over 2600 loans and 21 months. I'm weighted mostly in Cs and Ds. I get the feeling we're making hay while the sun shines. These kinds of returns will attract competition wanting to undercut them because investors are accepting 2.5% in the bank or on rental properties. O/seas returns in these sorts of investments are not as good as they are here.
    Really? I think the harmoney returns are absolute rubbish. My property, share and fund investments provide much higher returns. NZ shares over 20% ytd (tax paid).

  7. #2807
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    Quote Originally Posted by Fisherking View Post
    Really? I think the harmoney returns are absolute rubbish. My property, share and fund investments provide much higher returns. NZ shares over 20% ytd (tax paid).
    Although harmoney provides diversification to a portfolio too.

  8. #2808
    yeah, nah
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    Quote Originally Posted by Fisherking View Post
    Really? I think the harmoney returns are absolute rubbish. My property, share and fund investments provide much higher returns. NZ shares over 20% ytd (tax paid).
    What period is the 20% for? Anything less than 10 years for shares is folly: +20% one year -20% the next year...Property even longer. Unless you're in the much riskier game of short term trades/property flipping.
    Last edited by myles; 28-10-2017 at 09:02 AM. Reason: spelling

  9. #2809
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    Quote Originally Posted by myles View Post
    What period is the 20% for? Anything less than 10 years for shares is folly: +20% one year -20% the next year...Property even longer. Unless you're in the much riskier game of short term trades/property flipping.
    20% is year to date as stated. Last couple of years are similar however i agree it's short term in the scheme of things.
    My point was that I don't think the harmoney returns are that great for an unsecured investment, particularly now we have v1.5.

  10. #2810
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    Quote Originally Posted by whitt View Post
    Although harmoney provides diversification to a portfolio too.
    Yes, excellent diversification.
    It will be interesting to see what happens to interest rates over the next year or two now it seems the US are looking to raise rates.

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