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  1. #461
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    Auckland
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    Hi, I mentioned in my previous post that Squirrel was launching a new lending product, and here it is http://www.squirrel.co.nz/squirrel-loans/launchpad
    For those who are investors with Squirrel, we emailed an investor update last night that contains further information.
    From an p2p investor perspective, part of this loan will fall into our personal loan investment class with a 5year term. Based on the scale of our mortgage advice team, we believe we will see growth in demand for investor funding in this term. We represent 3.2% of all first home buyers in NZ already, and we believe we can help more people in this part of the market with this proposition.
    Interested in your thoughts!

  2. #462
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    Jul 2017
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    Quote Originally Posted by DT@squirrel.co.nz View Post
    Hi, I mentioned in my previous post that Squirrel was launching a new lending product, and here it is http://www.squirrel.co.nz/squirrel-loans/launchpad
    For those who are investors with Squirrel, we emailed an investor update last night that contains further information.
    From an p2p investor perspective, part of this loan will fall into our personal loan investment class with a 5year term. Based on the scale of our mortgage advice team, we believe we will see growth in demand for investor funding in this term. We represent 3.2% of all first home buyers in NZ already, and we believe we can help more people in this part of the market with this proposition.
    Interested in your thoughts!
    Hi DT

    An interesting concept. Could you please answer the following questions?
    Do many prospective buyer fit the requirements particularly in relation to the responsible lending requirements?
    How is the equity loan secured (e.g. 2nd mortgage, caveat, other or unsecured)
    Presumably, should house prices tank resulting in a negative equity and forced sale event, the equity loan lenders risk taking a bath while the first mortgagee may fare OK?

  3. #463
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    Auckland
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    Hi Joker, here are some answers:
    1. If we think about segments within the first home buyer market, Launchpad can help those who are looking at property above the Kaianga Ora thresholds. It's hard to exactly determine the size of the target segment, but we know almost $1b per month is lent to First Home Buyers. Primarily the people we will help will be in metro locations given the Kaianga Ora thresholds. It's worth noting that Squirrel Mortgage Advisors are salary based (not commission), so they are there to find the right deal for our customers, if Launchpad is not the right product for the situation, it will not be offered.
    2. The Equity Loan will be secured using a 2nd Mortgage
    3. Ultimately risk comes down to whether the borrower chooses to make their loan payments. A borrower could be in a negative equity situation and still making their loan payments. The thing I will be most closely watching will be the unemployment rate. We've taken some extreme scenarios into our modelling, and have we believe a good handle on how the portfolio will perform under various loads. For Squirrel, our starting point is charge a reserve levy on all these loans at a rate that is higher than our modelling suggests the risk will be, so we're erring on the side of caution.

    Credit risk is determined by the probability of default * loss given default. You can work through various permutations of this.

  4. #464
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    Dec 2001
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    Wellington, , New Zealand.
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    Interesting to see how this works out. Looks good to me as it bypasses government restrictions around price, income, Kiwisaver, first home, mortgage insurance etc. And focuses on households who actually have a good shot at home ownership if the deposit requirements are loosened.

    So some innovative thinking from Squirrel.

    The government First Home scheme has a serious flaw IMO as a combination of very low deposit and low-ish income doesn't allow for much leeway if something goes wrong. Like employment or relationship changes, illness, babies. Yes there is mortgage insurance part paid for by taxpayers, but AFAIK this protects the mortgagee and not necessarily the mortgagor. (Is that right?)

    Edited to add - there are likely to be quite a lot of rentals up for sale once the latest changes kick in and owners freak out. Many could well be suitable for FHBs less constricted by current rules.
    Last edited by artemis; 21-04-2021 at 07:36 PM.

  5. #465
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    Nov 2020
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    What is your experience with expected vs actual term of investment on the Squirrel platform? I've made 10 investments over the past 16 months or so across several type classes for various amounts and only 2 have run to full term. The result being ROI received has been tracking about 45% less than anticipated.

  6. #466
    Junior Member
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    Jan 2020
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    Auckland
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    Hi @malreid, I look after Squirrels lending and investment business.

    For Home Loans and Construction Loans, we do have loans that pay back early and we always have new loans available, so you should be able to remain invested at all times.

    For Personal Loans, the 1 year term has a high prepayment rate and this means there is then a wait time in the queue. For the 2-3 and 5-7 year terms the prepayment rate is a lot lower so there should be less issues with having to reinvest. Wait times for the 1year term are currently 1 - 2 weeks, and the 5 - 7 year term is around 30days.

    Last but not least, because Squirrel has Reserve Funds in place behind all investments, they help protect you in the event that a loan misses a payment or defaults. To date, no investor has missed the return of their principal or their interest.

    Happy to take any other questions.

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