Harmoney

[mlt322]

And for that reason ... 'I'm out' ...

I gave it a 1 year trial with $10k and if things would change again, I might re-consider putting in more. For now, it's solely going to be 'Withdraw funds' from now on.

Would be interesting to know how many of us are abandoning the HM ship.

And not a word from HM on this forum since the announcement.

Perhaps their plan is to ditch retail lenders altogether in favour of their institutional customers. This would be a great way to exit that part of the market whilst reaping some big fat fees for those that wish to remain.

[Saamee]

Made time to do my own calculations.... ( based on between 10K to 20K - so New Fee = 17.5% )

@ Current Rate of 1.25% to date = $164.63 Service Fess on $2,378.75 of Interest returned = 6.92% Fee rate

I calculate under the new scheme @ 17.5% the Harmoney Fee would be $416.28

That works out to 2.52 times the old scheme Fee

[Broke]

Would be interesting to know how many of us are abandoning the HM ship.

And not a word from HM on this forum since the announcement.

Perhaps their plan is to ditch retail lenders altogether in favour of their institutional customers. This would be a great way to exit that part of the market whilst reaping some big fat fees for those that wish to remain.

you gotta admit, its probably too much of a hassle for them replying to all the thousands of lenders filling their inboxes "wah, what happened to my $25 loan, why was it re-written?" "waah, howcome this note I lent got defaulted on?"

Better to deal with a dozen big institutional lenders than a horde of retails.

[RMJH]

I guess they had to increase fees because we have effectively been getting the platform fee since the rate hikes! I have paid $760 in fees and under the new scheme this would be $1926 but of course against that you have to consider the extra interest. That's actually a hard calculation/simulation but in short the A & B's will be less profitable (maybe 1-2% drop in yield) whilst the higher grades might be neutral (or possibly even favourable) if the market will bear them. I bet Harmoney will still be losing money for a while yet as the industry is still in its infancy so personally I am happy to continue to support them in creating this new asset class.

[WingingIt]

ANyone notice one of the columns in the 'Investments' section has now changed to - Max term (months)? Used to be payments remaining didnt it?

[kiwi_on_OE]

ANyone notice one of the columns in the 'Investments' section has now changed to - Max term (months)? Used to be payments remaining didnt it?

Just noticed a change there myself. My recollection is that there used to be two columns, one for Term and one for number of payments remaining. Which I found useful when looking at loans in arrears. Now it's all guess work.

[WingingIt]

Just noticed a change there myself. My recollection is that there used to be two columns, one for Term and one for number of payments remaining. Which I found useful when looking at loans in arrears. Now it's all guess work.

Yep you're correct I also thought there were two columns turned into one.

It was extremely useful for seeing whether borrowers were up to date or behind in payments.

I've sent off an email and will report back with their reply.

[kiwi_on_OE]

The Dec 15 interest rate increases were done as part of their move from a variable/risk-adjusted fee to a flat fee, with the intention that borrowers paid around the same amount overall.

The theoretical example on their website uses interest rates from before the change, links/compares them with current interest rates, with the implication that the current fee change is related. I think that is pretty clearly misleading or deceptive. The Fair Dealing section of the FMC Act deals with "misleading or deceptive conduct".

Harmoney, you may wish to change the example otherwise I will complain to the FMA on Monday.

FYI. I won't be complaining to the FMA about this. I still think it is misleading/deceptive, and I'll add poorly explained. As I see it, Lenders have been the beneficiaries of the interest rate increase in Dec, not Harmoney. So this change is a way of paying a similar(?) NET amount of fees to Harmoney that they were getting pre-Dec. I guess this is implied, but not stated, by their example?

A couple of other things I noticed: -
1) The interest rates on A and B loans weren't increased in Dec, so they're badly affected by the change. D, E and F loans had Dec rate increases, so although the impact of this change in Jun is big, compared to Dec we're still ahead, just.
2) the 15%/17.5%/20% rates are assigned to the loans when they are taken out. So if you get to $10k+/$50k+ loans, they will be charged at different rates. But as the earlier loans are paid off/re-written the replacement loans will be charged at the lower rate.
3) 12k borrowers pa(?) @ $375 fee => $4-5m pa, $24m pa int @ 10%(?) fee => $2-3m pa. So they could be earning about $7m pa. I wonder what their costs are?

[Darchie]

FYI. I won't be complaining to the FMA about this. I still think it is misleading/deceptive, and I'll add poorly explained. As I see it, Lenders have been the beneficiaries of the interest rate increase in Dec, not Harmoney. So this change is a way of paying a similar(?) NET amount of fees to Harmoney that they were getting pre-Dec. I guess this is implied, but not stated, by their example?

A couple of other things I noticed: -
1) The interest rates on A and B loans weren't increased in Dec, so they're badly affected by the change. D, E and F loans had Dec rate increases, so although the impact of this change in Jun is big, compared to Dec we're still ahead, just.
2) the 15%/17.5%/20% rates are assigned to the loans when they are taken out. So if you get to $10k+/$50k+ loans, they will be charged at different rates. But as the earlier loans are paid off/re-written the replacement loans will be charged at the lower rate.
3) 12k borrowers pa(?) @ $375 fee => $4-5m pa, $24m pa int @ 10%(?) fee => $2-3m pa. So they could be earning about $7m pa. I wonder what their costs are?

Yes A and B loans will give low yields ..and seem to be highly represented in those rewrites. .. yet those investors (after June increase in fees) will find those rewrites their friend if they're trying to break into the next tier to get a lower fee snatched from them.... i will add though those A loans don't seem to feature in the arrears reports like other grades.

Here's another angle:
Worst of both figures 33% tax plus 20% fee means 53% gone before any writeoffs or
Then 33% tax plus 15% fee ... 48% gone - so rule of thumb one can round that to 50% (but I'm sure sour loans will be more of a loss than 2% over time ... especially with a down turn) so its an easier way to look at the loan grades when ya see the rate offered .. just halve it, it might indicate the amount you might keep for all ya hard earned capital that's at risk!

I do think Harmoney is being Greedy, as this platform is offering unsecured loans ... so I ask do you think they'll be spending more now on scrutinizing the loan applications? Or even allocating more to souring loans? ... I'm not sure ...

[humvee]

I guess they had to increase fees because we have effectively been getting the platform fee since the rate hikes! I have paid $760 in fees and under the new scheme this would be $1926 but of course against that you have to consider the extra interest. That's actually a hard calculation/simulation but in short the A & B's will be less profitable (maybe 1-2% drop in yield) whilst the higher grades might be neutral (or possibly even favourable) if the market will bear them. I bet Harmoney will still be losing money for a while yet as the industry is still in its infancy so personally I am happy to continue to support them in creating this new asset class.

Its not just A & B Grade hit hard by this - if you look back at the interest increase a number of F grades got little or no interest rate increase either. Also what people forget is the high interest rates on E & F grade loans is because of the higher risk of default. Harmoney will be taking a massively larger cut of the interest we receive for taking this risk, yet they incur no extra risk them selves

Fee increase for a F5 Grade was 910% Fee increase for a E5 works out at 890%

I cannot remember the others off the top of my head but the interest rate increase for a f5 was 0% and for a f4 was 0.01%

So for me it will most likely mean I wont invest in A, B , E or F grade any more - so I need to decide if its worth continuing for only C & D Grade.

I don't have a problem with the change to the new method if calculating fees - the new way is the best way to do it - they have simply set the fee % too high. If they set it to 10% it still would have been an increase for most, but would be much more reasonable and inline with other P2P players in the market