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  1. #441
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    I see that the Squirrel Reserve Fund has dropped since I last looked about a month ago. If it continues to drop, can Squirrel increase the proportion of interest that is credited to the reserve fund, or do thy have to wait until such time that 100% of the interest is needed to be diverted to the reserve fund to cover defaults?

    With Corona Virus already causing economic issues, there could be borrowers under stress.
    Last edited by Bjauck; 08-03-2020 at 09:11 AM.

  2. #442
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    Quote Originally Posted by Bjauck View Post
    I see that the Squirrel Reserve Fund has dropped since I last looked about a month ago. If it continues to drop, can Squirrel increase the proportion of interest that is credited to the reserve fund, or do thy have to wait until such time that 100% of the interest is needed to be diverted to the reserve fund to cover defaults?

    With Corona Virus already causing economic issues, there could be borrowers under stress.

    Squirrel alter the % rate payable, often.

    However I doubt that they will change it enough to keep up, if Bad Loans come in faster than in the past.

    It must be expected that Bad Loans will come in fast from now on, as Forestry, Hospitality, Travel and Hotel Industries all start to take a Hit!!


    I personally took a decision 2 weeks ago not to invest any more in to P2P Loans at this time.

  3. #443
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    Quote Originally Posted by Saamee View Post
    Squirrel alter the % rate payable, often...
    I personally took a decision 2 weeks ago not to invest any more in to P2P Loans at this time.
    Thanks. There is a lot of uncertainty around at the moment. With interest rates falling and bad debts increasing, there is the prospect for a big squeeze.

    Aussie Bank shares & HGH have been hard hit too. The market is probably expecting a tough time for borrowers.
    Last edited by Bjauck; 08-03-2020 at 09:55 AM.

  4. #444
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    I suspect the Squirrel Reserve Fund is going to come under a real stress test this year if the predicated recession occurs.

  5. #445
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    @morphs - Yes, for sure it will.


    Below is the reserve fund figures as of this morning.


    So just $485,958 of Bad loans......... and the Reserve Fund is at ZERO!!



    SM RES FUND.jpg


    SM RES FUND 1.PNG
    Last edited by Saamee; 12-03-2020 at 01:08 PM.

  6. #446
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    2020 RWT Certificares already available for member download.....

  7. #447
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    Some defensive PR from Squirrel in the mailbox this arvo ... must be feeling the pinch!

    Case study 1
    Investing class: Home Loans


    A mortgage for an experienced property investor


    The first loan on our platform is for $1.4m and is secured over two properties in Point Chevalier, Auckland with $1.1m in security over each. It has a 70% loan to value ratio.


    Our credit policy:


    Maximum loan to value ratio of 80%
    Maximum loan of $1m per property and a total limit of $2m
    With our first Home Loan on the platform, the borrower owns $31m in property and has $12m in lending.


    The funds borrowed from Squirrel are for working capital and the client is holding $3m in cash. The customer’s property portfolio is diversified and generates over $1m p.a. of income. He has also provided a personal guarantee on the loan. This means that there is someone standing behind the loan who can guarantee the payments at a personal level, similar to when a parent acts as a guarantor on a home loan for their children.


    The reason the client borrowed from Squirrel is that banks treat them as a commercial client and will only lend against the income of the property they have security over and with too many covenants. He was prepared to pay a bit more for a simpler borrowing solution.


    We felt this mortgage was low risk because:


    The client has strong underlying income from a diversified property portfolio
    They are carrying a low level of gearing (low LVR)
    The security is a first residential mortgage with a loan to value ratio on the properties of 70% and a personal guarantee from the borrower
    The borrower holds significant working capital and undrawn revolving credits (meaning he has cash available to him)


    You can invest into this mortgage now. The investor return is 4.0% p.a. variable, and you can find out lots more about this investment class from our investor handbook here.


    This loan is also protected by our Home Loan Reserve Fund, which protects investors from loan arrears and loan defaults.
    "The market can stay irrational longer than you can stay solvent." – John Maynard Keynes

  8. #448
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    Currently the situation must be very toght for Suirrel Money, I have never before heard them advertising on the radio in NZ.

    However over the last month they are pushing loans and webinars to learn more.

    They have that massive $1.3M house loan at 4%..... and it looks like the majority of would be investros are NOT interested in taking a slice of it!!

  9. #449
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    Quote Originally Posted by Saamee View Post
    Currently the situation must be very toght for Suirrel Money, I have never before heard them advertising on the radio in NZ.

    However over the last month they are pushing loans and webinars to learn more.

    They have that massive $1.3M house loan at 4%..... and it looks like the majority of would be investros are NOT interested in taking a slice of it!!
    At only 4% the risk-reward balance looks tipped more towards risk at the moment. The interest rate would need to be higher to tempt more investors?

  10. #450
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    Today received an Email from Squirrel Offering TO PAY us Investors $500 to $1,000 to get into Property \ Business Loans....

    Wow they are getting very very Deperate now...

    Even more reason to stay away!!!!

  11. #451
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    4% Return for investing in Home Loans at this point in time - No Thanks - What if the house value drops by 15% and ONLY 100K in Reserve Fund!!


    5% Return on a Business Loan - NO Way - Investing in Business Loans at this time with only ONLY 100K in Reserve Fund!!


    6% - 7% in Personal Loans - Maybe - Have 500K in Reserve Fund ( best risk ) however better returns elsewhere in P2P



    SM.jpg


    SM RF.jpg

  12. #452
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    Don't get me wrong.... SM is still the ONLY P2P Lender I have had NO Capital Losses with.... ( Thanks to their Persoanl Loan Reserve Fund )

    It's just their offerings have changed \ evolved over time ( where other P2P Lenders have not so much ) and what they now offer Investors is no longer attractive to myself....

  13. #453
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    Hi Saamee,

    You're assessing a reserve fund against low LVR lending secured over property. They are totally different things.

    The average expected credit loss rate on a residential house book is 0.0005%. Over $150 billion of prime residential mortgage have been sold to investors in Australia with no investor losses. Even in Ireland during the GFC the loss rate of residential mortgages was only 5% and that was with a 50% drop in house prices and 1 in 10 households defaulting and 50% of new lending with deposits less than 20%. The UK had a loss rate 0.50% over the same timeframe.

    Banks are lending at 2.70% on home loans, and we are paying investors 4%. The only reason we can do that is we are targeting older borrowers with very low LVRs who the banks tend to neglect. With the amount of equity in these properties we don't need reserves for losses, just to cover any arrears. The reason we are publishing examples in the blog is to add colour to the types of loans we are doing so investors can see that for themselves. It's purely to educate the market.

    The Business Property Loan is lending on simple residential builds with unconditional buyers on the end of the transaction deposit paid. Benefit of buyer, deposit paid, 20% equity in transaction, and guarantee from build franchise.

    These products won't be for everyone and certainly not right for anyone chasing higher risk/returns.

    As for us being desperate, hardly.

    Squirrel write over $1 billion of mortgages each year as a mortgage broker. We can now provide some of those through to the investor platform and already have $10m that we have pre-funded with our own facilities to pass down to the platform. We are keen to get investors engaging in this new investment class and so are promoting it.

    Alternatively we could just get a big wholesale facility funding them at <4.00% and not bother about retail investors i.e. do a Harmoney. We're publicly committed to P2P which means we have to spend money promoting it and encouraging it to gradually grow.

  14. #454
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    How long are people currently waiting to have their order filled for Personal Loans @ 7.5%??

    I see that there is 343K in the queue as of today....


    Capture.PNG

  15. #455
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    Quote Originally Posted by Saamee View Post
    How long are people currently waiting to have their order filled for Personal Loans @ 7.5%??

    I see that there is 343K in the queue as of today....


    Capture.PNG
    Hi @saame, Dave Tyrer here from Squirrel. I estimate a 2 week wait at present in the 5-7year personal loan term. Hope that helps.

  16. #456
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    Dave Tyrer here from Squirrel. I estimate a 2 week wait at present in the 5-7year personal loan term. Hope that helps.[/QUOTE]

    @DT >> Thanx for the 'Inside reply'

    So currently about 175K a week is being filled @ that rate....

    Rgds

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    Just put some 9% Loans on the Secondary market......

  18. #458
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    Quote Originally Posted by DT@squirrel.co.nz View Post
    Hi @saame, Dave Tyrer here from Squirrel. I estimate a 2 week wait at present in the 5-7year personal loan term. Hope that helps.
    How long is the wait now?

    Is Squirrel back to the normal repayment process for loans? Does it still have a Covid response in place?

  19. #459
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    Hi @Bjauck. The wait for 5 - 7yr investments is roughly 4 - 5 weeks at present. We have a new lending product coming to market very soon that will help shorten wait times in this term. Worth mentioning that wait times in the 1year space are much shorter 1 - 2 weeks at present. We also have investments available in the Home Loan and Business Property Loan investment classes, so no wait time for these ones.
    Regarding loan repayments and Covid: our borrower arrears rate is running about 4%, and there are 9 loans in hardship at present. We know the average market arrears rate for personal loans is running between 7 - 8%. The personal loan reserve fund is higher today than it was 12months ago, with a coverage ratio of over 4% (disclosed on the investor tab on our website).
    Hope that answers your questions.
    Thanks
    Dave

  20. #460
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    Thanks for your reply DT. It sounds to be in a good position.

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