Harmoney

[leesal]

Looks like an admission by Harmoney that interest rate reductions called scorecard 1.5 were too low (as evidenced by a severe drop in the RAR graph since).

10% wouldn't provide institutional investors with adequate return relative to the risk.

Capture.JPG

Since HM success is through ticket clips, I'd say the institutions are behind this (us as lendors are simply a marketing angle). HM "investing" would better align their interests with institutional investors

Either way, am happy to have an extra 2-3%

[myles]

Just for comparative and historic record:

InterestRates.png

Those high end B Grade loans are looking good again. I do wonder if the grading process Harmoney uses will change i.e. will a new B5 borrower be the same as an old B5 borrower, or is this a way to 'shift' investors who continue to select the same grade/rate loans???

Attachment 9658

As a chart - smoothed as it looks better... Interesting that the lower-mid grade loans now have a higher interest rate then they did pre August 2017.

I'll include default rates if a new set is published...

[RMJH]

I do wonder if the grading process Harmoney uses will change i.e. will a new B5 borrower be the same as an old B5 borrower, or is this a way to 'shift' investors who continue to select the same grade/rate loans???

Would be good if the grade related to an explicit expected default rate band but I think the expected default moved with 1.5 and as you say we don't have new forecasts for the current re-pricing.

[RMJH]

Grade	Forecast default rate p.a.
Scorecard 1.0	Scorecard 1.5
A1	0.08%	0.05%
A2	0.13%	0.10%
A3	0.16%	0.11%
A4	0.21%	0.12%
A5	0.27%	0.14%

Grade	Forecast default rate p.a.
Scorecard 1.0	Scorecard 1.5
B1	0.32%	0.16%
B2	0.42%	0.18%
B3	0.54%	0.21%
B4	0.63%	0.25%
B5	0.74%	0.30%

Grade	Forecast default rate p.a.
Scorecard 1.0	Scorecard 1.5
C1	0.86%	0.37%
C2	1.04%	0.46%
C3	1.19%	0.56%
C4	1.39%	0.70%
C5	1.51%	0.89%

Grade	Forecast default rate p.a.
Scorecard 1.0	Scorecard 1.5
D1	1.53%	1.13%
D2	1.79%	1.42%
D3	1.95%	1.78%
D4	2.21%	2.18%
D5	2.50%	2.60%

Grade	Forecast default rate p.a.
Scorecard 1.0	Scorecard 1.5
E1	2.78%	3.14%
E2	3.52%	3.70%
E3	4.11%	4.38%
E4	4.95%	5.12%
E5	6.05%	5.84%

Grade	Forecast default rate p.a.
Scorecard 1.0	Scorecard 1.5
F1	6.96%	6.62%
F2	8.36%	7.34%
F3	9.79%	8.09%
F4	12.63%	8.78%
F5	15.38%	9.49%

[RMJH]

Sorry headings are not aligned.

[beacon]

Sorry headings are not aligned.

Will be interesting to see how the default rates may have changed, if at all. I think the interest rate changes (at least for the less risky grades) finally reflect the risk more accurately now.

By the way, all such changes (better or worse) render historical comparisons less useful.

[beacon]

Grades with a changed default rate:

C4
D1-D5
E1-E5
F2,F4,F5

These may not be the latest release. Harmoney has had these differing default rates on 2 separate pages online for months now.

[Investor]

These may not be the latest release. Harmoney has had these differing default rates on 2 separate pages online for months now.

I had the original scorecard 1.5 default rates saved on excel and compared them to the current ones on their website. Not sure when it was updated since 1.5 (if not in the last few days).

[beacon]

I had the original scorecard 1.5 default rates saved on excel and compared them to the current ones on their website. Not sure when it was updated since 1.5 (if not in the last few days).

Use the rates here: harmoney.co.nz/investors/investment-risks
as they seem to match the info in loans more, although I haven't checked this in the last 5 months

[beacon]

The other page was here: https://www.harmoney.co.nz/how-it-works/scorecard-1-5
Default rates on these two pages match now, so they must have corrected the differing page in Dec/Jan