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“Pure balderdash. But nobody argues with Economists and central bankers. So, the French government thought nothing of enacting an enormous… Andrewj on A review of things you need to know before you go home on Tuesday; car sales drop, Ardern pitches CPTPP to Moon, hydrogen chosen, NZ wins on trade, big bond rate falls, NZD rises, & more Balyasny Fires 20% Of Its Staff As Hedge Fund Loses Billions; Einhorn Is Down 28% YTD
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https://www.zerohedge.com/news/2018-12-03/balyasny… Andrewj on A review of things you need to know before you go home on Tuesday; car sales drop, Ardern pitches CPTPP to Moon, hydrogen chosen, NZ wins on trade, big bond rate falls, NZD rises, & more True, a few commenting in this thread would benefit from a mechanic, from all the whining noises being generated. RickStrauss on Car sales enter a sales shadow in November with SUV demand lower, especially for medium-sized SUVs. Commercial demand stays strong And all that money and more besides get spent on roading and transport. Would you prefer cheap gas and $100/1000kms road user charges… Pragmatist on The Commerce Commission will have a year to do a market study on the retail fuel market; more industry probes to follow The fact that we pay at least $50 per tankful for a medium vehicle in taxes will be conveniently swept under the rug…I mean, report. Ludwig on The Commerce Commission will have a year to do a market study on the retail fuel market; more industry probes to follow Integrated. Now theres an interesting peice of terminology. I’m 43, I remember when everything in society was integrated, it wan’t perfect… The_4th_estate on Andrew Crisp appointed CEO of the new Ministry of Housing and Urban Development responsible for KiwiBuild, Housing NZ and the new Housing and Urban Development Authority Mbie were systematically under resourced through that entire period, I’m suprised they managed to keep the lights on! The_4th_estate on Andrew Crisp appointed CEO of the new Ministry of Housing and Urban Development responsible for KiwiBuild, Housing NZ and the new Housing and Urban Development Authority Jock, are you sure that a recession lags 1 – 2 years the 2-10 curve going negative? I thought it previously was about 2 quarters. Do you… Yvil on Equity investors approve of China-US deal, but bond investors dont; US factory data unchanged, others weaker; ECB adjustment; Sydney house prices fall; UST 10yr at 2.99%; oil and gold up; NZ$1 = 69.3 USc; TWI-5 = 73.8 Worth the watch too! Masher on Equity investors approve of China-US deal, but bond investors dont; US factory data unchanged, others weaker; ECB adjustment; Sydney house prices fall; UST 10yr at 2.99%; oil and gold up; NZ$1 = 69.3 USc; TWI-5 = 73.8 I’d think about the many, many, many years when my house went up, have another beer and have a huge smile my face Yvil on Equity investors approve of China-US deal, but bond investors dont; US factory data unchanged, others weaker; ECB adjustment; Sydney house prices fall; UST 10yr at 2.99%; oil and gold up; NZ$1 = 69.3 USc; TWI-5 = 73.8
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This is the same Commerce Commission that allowed Z to buy Caltex and give Z 50% market share, shouldn’t take too long to use the findings from that… by: John on The Commerce Commission will have a year to do a market study on the retail fuel market; more industry probes to follow The link between bank mortgages and insurance availability should not be understated. An example: as soon as the extent of land elevation reduction (… by: middleman on Jenée Tibshraeny on why you should spend more time talking to insurers before buying a property While I don’t have too much sympathy for investors, I think there are some issues brewing with the private rental market.
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In many cases now property… by: Fritz on David Hargreaves looks at some of the past impacts of the RBNZs LVR speed limit home loan restrictions and ponders how the latest changes to the LVRs might affect the housing landscape ‘The Trump Organization Planned To Give Vladimir Putin The $50 Million Penthouse In Trump Tower Moscow’ – https://www.buzzfeednews.com/article/… by: Gareth Vaughan on DCReports David Cay Johnston says US President Donald Trumps reaction to GM layoffs shows he doesn’t get automakers, technology or his own new tax law Actually fill a super tanker. However he does seem to be a master of debt and knows how to skin a mark, give credit where it is due.
by: steven on DCReports David Cay Johnston says US President Donald Trumps reaction to GM layoffs shows he doesn’t get automakers, technology or his own new tax law In the interests of Adrian Orr’s call for a broader perspective, here’s an article from a couple of years ago; Why banks should be holding more… by: Gareth Vaughan on Governor Adrian Orr says RBNZ to impose capital standards on banks that match the public’s risk tolerance Tax avoiders dream. Time to get out the white board marker and start dreaming up “arrangements”;)
by: HeavyG on Tax Working Group members Craig Elliffe and Robin Oliver discuss the challenges of creating a comprehensive Capital Gains Tax that excludes the family home The family home exemption is a mistake on several levels.
Most importantly, it puts yet another disadvantage on renters.
by: Ryan G-M on Tax Working Group members Craig Elliffe and Robin Oliver discuss the challenges of creating a comprehensive Capital Gains Tax that excludes the family home If the family home is exempt it’s a mistake. More money will flow into the family home than otherwise would to create very expensive upmarket suburbs… by: Shoreman on Tax Working Group members Craig Elliffe and Robin Oliver discuss the challenges of creating a comprehensive Capital Gains Tax that excludes the family home 30% deposit for investors = 17% increase in borrowing capacity compared to 35% deposit.
Places already popular with investors (where investors… by: Simon on The Reserve Bank is loosening the speed limits on high loan to value ratio lending and says further relaxation of the rules is likely in future
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In many cases now property…
Most importantly, it puts yet another disadvantage on renters.
Places already popular with investors (where investors…
Cards & Loans
Investing & Saving
Cards & Loans
Investing & Saving
- P2P lending offers bank-beating returns on your money, but not without risk. You can earn an estimated 7-9% per annum (Squirrel Money) and ~12-14% per annum (Harmoney)
- New Zealand has a number of platforms available, with Harmoney being the largest and most active.
- As the platforms get more experienced, it is likely their credit assessments (i.e. working out if they should loan to borrowers) improve, protecting investors from losing some or all of their investment.
- Squirrel Money protects investors with a ‘Loan Shield’ which is worth understanding if you’re keen to get involved in P2P but want more protection over your money.
Peer-to-peer (P2P) lending has become something of an underground sensation among investors and borrowers alike. The idea is simple – Kiwis with spare money help other Kiwis looking for a short-term loan with low fees and interest rates. The loans are then managed by websites, acting as online platforms, which (somewhat) cut out the middlemen and embrace the ‘sharing economy’. Firms like Harmoney and Squirrel Money have seen a surge of transactions as people look for lower lending rates and higher investment returns; lenders are told they can receive returns of 8 to 12% per annum while borrowers are lured in with bank-beating personal loans.
Peer to peer lending can work well as a long-term investment, but before you go all in on this hybrid form of saving, it’s essential you understand how peer to peer lending works as well as its risks and limitations.
This is a complete guide to the best peer-to-peer lenders in New Zealand, explaining how the platforms work, how the industry is regulated, what the risks are and how the different players compare. Beyond this page, we’ve reviewed P2P leaders Harmoney and Squirrel Money separately to provide a complete guide to their offering for investors and borrowers.
The Financial Markets Authority regulates peer to peer lending, and only companies on the New Zealand approved peer to peer lender list can offer such investments.
- What is peer-to-peer lending?
- What are the risks – Why P2P isn’t for everyone
- 10 P2P Must Knows
- Best Peer-to-peer investment returns – Harmoney – earn up to 14%, minimum investment $500 and Squirrel Money – earn up to 8.89%, minimum investment $500
Peer-to-peer lending looks and feels like a bank or finance company term deposit, but it’s very different. If a borrower doesn’t repay, your P2P investment can be reduced. The ensure minimum risk to lenders, P2P platforms have their own credit application criteria. This includes thorough credit checks by third-party agencies and affordability tests. P2P platforms also manage the day-to-day loan repayments and collections process for overdue loans. Bad debt, which arises when a borrower doesn’t repay the loan, is deducted from your investment.
P2P lending may appeal to you if you’re free of personal debt and want a higher return on the money you would otherwise invest in term deposits. If you feel comfortable taking a punt then go for it. You’ll learn a lot more about this niche investing industry while you (most likely, but not guaranteed) beat the returns from banks. Compare the most current interest rates:
- Best 2-year interest rate: Bank of India, 4.00% per annum (minimum $5,000)
- Best 5-year interest rate: TSB, 4.05% per annum (minimum $10,000)
- Peer-to-peer websites: An estimated 7-9% per annum ( Squirrel Money ) and ~12-14% per annum ( Harmoney )
It’s worthwhile noting that the interest you earn from peer-to-peer lending will need to be assessed in your annual tax return. Unlike bank deposit income, P2P lenders in New Zealand do not tax your interest income upfront.
Peer-to-peer is closely regulated
The Financial Markets Authority is heavily involved in the regulation of P2P. Currently, there are only four active players either taking investments or loaning money. Due to the costs of regulatory compliance to set up a P2P platform coupled with the challenge of Harmoney’s dominance in the market, we do not see new players starting up any time soon.
After funding your account, you need to wait for a borrower to make a loan application. Some P2P platforms are more popular than others, so while you wait to fund a loan your cash is not earning any interest. If you’re investing say $10,000, this may take a few weeks to drip feed into available loans.
If you invest your money with a bank and they lend it unwisely, the bank is obligated to repay your investment. With peer-to-peer lending, unless the loan is secured, you are not protected if the borrower defaults. You can’t go after them personally either as the identity of borrowers is always protected by P2P platforms. Any loan default is written off against your investment. Some platforms may have funds set aside to protect against this risk, but the cost will be funded one way or another by your investment.
This is a significant risk as the industry is new to New Zealand and it’s reasonable to expect not every platform to stay afloat. By law, the loans are between you and the borrower, so if your P2P platform goes under you’ve still got a right to your money. All platforms have an independent trustee who appoints a backup third-party loan administrator, but such an event would likely disrupt the day to day loan management and collections processes. The details of loans would be passed on, but the collections process could be different, and the changes might cause a rise in defaults as borrowers become aware of the situation.
Once you’ve lent your money to borrowers, the term of repayment is fixed. This means that you cannot break the commitment and redeem or withdraw your money early. If a loan was for 36 months, you will receive your money back in equal chunks every 36 months (unless the borrower repays it early, or defaults altogether). If you invest in a fixed-term deposit with a bank, you can withdraw with or without penalty but access to your cash is near immediate. This is not possible with most peer-to-peer lending platforms.
Peer to peer lending comes in many forms. Some P2P platforms have raised money for business ventures that have later gone bankrupt leaving investors with nothing. In New Zealand, crowd-funding platforms like the Snowball Effect have raised money for projects that have turned sour – the financing of the film Mahana being an example. There is no certainty that future repayments will be made, especially if economic conditions deteriorate, and unsecured loans are usually the last to be repaid by a distressed borrower. Essentially, current economic conditions cannot be relied upon to justify making a medium or long-term investment.
P2P platforms may deduct tax (RWT) from your investment income. If your investment is around $1,000, it’s likely that your pre-tax earnings every year will be between $50-$150 and the RWT will be deducted at source by the P2P provider.
The more lending a P2P has undertaken, the better the platform is likely to be in terms of its credit processes. It will have more data, can make better decisions and reduce bad debts for investors.
A P2P platform with a large number of loans is likely to be more efficient and be in a better financial position than a small P2P with a tiny loan book. For example, a P2P with five staff and a $100m loan book is probably more financially secure than a P2P with five staff and a $2m loan book.
P2P platforms offer different ways to invest. For example, Squirrel Money is a passive investment – they pick the loans your money goes into and invest accordingly. You simply receive repayment when money is returned by the borrower. This differs to Harmoney which lets investors pick the loans they want to invest in, and what interest rate they want to receive. Passive P2P offers a ‘set and forget’ approach, whereas active P2P lending tends to grow investor knowledge. What is right for you will depend on your overall interest in Peer To Peer lending.
Lenders have the best chance of protecting their investment through diversification. If you lend $1,000 to a specific borrower and they don’t repay, you will lose everything the borrower hasn’t repaid. For this reason, P2P platforms encourage splitting up your investment to reduce being overexposed if a loan goes bad.
There is no fee for an investor to join a P2P but both the borrower and lender are charged on both sides of a loan transaction. An investor will usually pay a percentage of either the capital invested and/or a percentage of the interest received. The borrower will pay an application fee and indirectly contribute to the P2P’s margin when interest and capital are repaid.
We’ve listed them below in order of usability, not necessarily returns. The most important difference between the various platforms is how they minimise your risks as a lender. The more loans the platforms have issued, the better their data and the more identifiable bad borrowers become.
Each site works slightly differently, but in general the bigger the risk, the higher the return.
Current rates: 13% per annum
Historic bad debt rate: 3.05%
Early withdraw? Not permitted
Unlent cash kept in: Heartland Bank
Loan protection offered? Yes, at an additional fee
Min/max lend amount: $3,000 to $70,000
Money lent so far: ~$700m
Lenders active: ~20,000
Risk mitigation. Harmoney converts every $25 invested into one ‘note’, and assigns a maximum of one note per loan. This diversifies your investments, and you have the option of selecting the loans you want to invest in, or using auto-invest. You select your risk type – the lower the risk, the lower the interest rate.
How quickly can you withdraw money? You need to wait out the duration of a loan to be repaid – there is no sell out function.
Read our detailed Harmoney review here
Current rates:7.89% (2-year rate), 8.89% (5-year rate) after fees but before income tax.
Bad debt rate: 0.80%
Fee: Up to 3% p.a. of the loan balance (deducted from gross loan repayment)
Early withdraw? Yes, with a fee of 1% of the loan balance fee (up to a maximum of $50 per investment)
Loan protection offered? Yes, not directly charged to investors, provided by Loan Shield
Minimum and maximum investment in platform: $500 to $2m
Money lent so far: ~$20m
Lenders active: 500-1,000
Risk mitigation. Squirrel Money offers a set rate at the time you put money in. You should receive this, unless there are major problems with the loans.
How quickly can you withdraw money? Its secondary market allows you to exit loan contracts immediately as long as another investor is wanting to buy them. There’s a fee to get your money back, currently set at 1% to a maximum of $50.
Read our detailed Squirrel Money review here
Harmomey and Squirrel Money are not the only P2P sites, although they are the largest. We’ve outlined two other P2P operators in the New Zealand market. These are both a fraction of the size of Squirrel Money and have their own specific lending practices as we outline below.
We do not believe there to be any further peer-to-peer consumer loan lenders actively operating in New Zealand beyond the three we’ve outlined. The Financial Markets Authority currently lists eight P2Ps – a couple of operators specialise in mortgage P2P lending.
Zagga (formerly Lendme) periodically accepts new loan applications for first mortgage lending, an area of P2P it specialises in. Investment is accepted on a case-by-case basis with the platform focused on sophisticated investors, funding credit-worthy borrowers. Loans range from between $25,000 up to $2 million and are predominantly secured through first mortgage security. Investors fund anything from $1,000 up to the full amount of the loan; interest rates for investors are typically between 6% and 10%, depending on their risk appetite and desired return. The company has stated publicly that since launching it has had a sole focus on higher quality loans. All loans issued to borrowers are assigned a risk grade and an associated interest rate, handled by the Zagga credit team. Every loan is supported by loan documentation and the associated security; this information is available to every investor on every loan.
Have you tried peer-to-peer lending? If so, please tell us about your experiences and anything else you think we need to add to this guide. Email us right now – we’d love to hear from you.