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Harmoney increases borrowers' interest rates

Peer-to-peer lender Harmoney has increased the interest rates it charges some of its borrowers.

Thursday, January 7th 2016, 6:00AM

by Susan Edmunds

It decides on an appropriate interest rate based on borrowers’ credit risk. Rates range from 9.99% for the best-rated borrowers, through to 39.99% for those deemed the highest risk.

But now it has tweaked a number of the rates it charges borrowers ranked in grades from C down.

C1 borrowers will now pay 18.52%, up from 17.15%. D1 borrowers will pay 24.41%, up from 20.59%, E1 will pay 31.81% up from 24.66% and F1 31.88%. The lowest, riskiest grade, F5, remains 39.99%.

Harmoney passes the interest rate on to investors, minus a 1.25% service fee on principal and interest repayments.

Harmoney says it has $633,225 in arrears in A-grade loans, almost $2 million in D-grade loans and just over half a million in the F grade. More than $300,000 in loans in the C, D and E categories have been “charged off” the Harmoney books.

Harmoney recently changed its platform fee for borrowers to a flat fee of $375. It had previously been calculated as 2% to 6% of the loan amount depending on the borrower risk grade, with a minimum of $300.

The Commerce Commission had been investigating whether that was a breach of the Credit Contracts and Consumer Finance Act, which requires administration fees to be linked to the work involved in administering a loan. It has not yet reached a conclusion.

In a recent update to Investors, Harmoney said it lent $3.4 million a week in the 2015 financial year, $489,000 a day and $5.67 a second. In a bit over a year, it lent more than $170 million.

About 20% of loans are now rewrites, where the borrower repays their loan and takes out a bigger one.   Investors have complained Harmoney is “double-dipping” on fees in this process because it is counted as completely repaid to the investor and the 1.25% cut is taken on the entire amount. Then when the larger loan is written, the investor pays 1.25% on those repayments too.

Tags: Peer to Peer Lending

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Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.44 - - -
AIA - Go Home Loans 7.99 5.99 5.69 5.69
ANZ 7.89 6.59 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.99 5.69 5.69
ASB Bank 7.89 5.99 5.69 5.69
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.40 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.94 - - -
BNZ - Rapid Repay 7.94 - - -
BNZ - Std 7.94 5.99 5.69 5.69
BNZ - TotalMoney 7.94 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.79 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 7.65 5.99 5.75 5.69
Co-operative Bank - Standard 7.65 6.49 6.25 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 6.40 6.10 -
First Credit Union Standard 8.50 7.00 6.70 -
Heartland Bank - Online 7.49 ▼5.65 ▼5.55 ▼5.55
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.00 6.50 -
ICBC 7.49 5.99 5.65 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.75 6.89 6.59 6.49
Kiwibank - Offset 8.25 - - -
Kiwibank Special 7.75 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.44 ▼6.39 ▼6.09 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.99 6.95 6.29 6.29
SBS Bank Special - ▼6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.44 ▼5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.69 6.79 6.49 6.49
TSB Special 7.89 5.99 5.69 5.69
Unity ▼7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 8.50 ▼6.19 ▼5.79 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 7.99 6.17 5.79 5.69

Last updated: 30 October 2024 9:36am

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