Squirrel expands peer to peer lending

Along with a new boss and a new building, Squirrel wants to do new things with its acorns

Monday, November 21st 2022, 8:59AM

So it is refocusing its peer-to-peer lending programme 100% onto the mortgage market.

At present it brings in about 20% of the company’s revenue.

Squirrel has for more than 13 years been associated mainly with mortgage broking, and has overseen more than $10 billion of lending for property.

But its more than 40 advisers have expanded into insurance and investing as well as peer-to-peer lending.

The aim of peer-to-peer lending is to tap into the biggest debt market by far, real estate mortgages, which Squirrel thinks should not be and never should have been a captive audience for the mainstream banks.

A banking expert from Massey University David Tripe thinks spreading access to the mortgage market makes sense in principle.

“There is no reason why some of the money going into bank deposits should not be expanded more directly into the residential property market, if there was an effective way of doing so.

“My question would always be what protections are in place if things go wrong, if somebody defaults.”

Squirrel’s boss David Cunningham, who recently replaced John Bolton as day-to-day manager, says protection for investors consists partly of pooled risk, and partly from a 1% reserve fund, which was set up especially to give protection against defaults.

This was in addition to the security of the building being loaned against.

Cunningham adds his scheme differs from most other second tier lenders by tapping into private investors with a few hundred dollars to spare, instead of accessing wholesale money markets.

It is currently offering 6% to 7.5% to its investors. .

The most recent figures from the Financial Markets Authority show the value of Squirrel’s loans doubling in a year. This was a similar rate of increase as a slightly smaller rival, Zagga, though both firms fell far short of the biggest peer-to-peer lender, Harmoney.

Tags: Squirrel