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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 4.55 3.55 3.89 3.99
AIA Special - 3.05 3.39 3.69
ANZ 4.44 ▼3.29 ▼3.45 ▼3.85
ANZ Special - ▼2.79 ▼2.95 ▼3.35
ASB Bank 4.45 ▼3.35 ▼3.19 ▼3.85
ASB Bank Special - ▼2.85 ▼2.69 ▼3.35
Bluestone 4.44 4.44 4.29 4.34
BNZ - Classic - ▼2.79 2.99 ▼2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.75 3.99 4.39
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 2.80 3.15 3.19
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 ▼2.80 ▼2.89 3.50
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC ▼4.40 ▼2.95 ▼2.95 ▲3.69
Kainga Ora 4.43 3.55 3.85 4.14
Kiwibank 4.40 3.74 4.14 4.40
Kiwibank - Capped - - - -
Kiwibank - Offset 4.40 - - -
Kiwibank Special - ▼2.65 ▼2.79 ▼3.25
Liberty 5.69 - - -
Lender Flt 1yr 2yr 3yr
Napier Building Society - - - -
Nelson Building Society 4.95 3.75 3.99 -
Pepper Essential 5.18 - 4.98 4.98
Resimac 3.49 3.45 3.39 3.69
RESIMAC Special - - - -
SBS Bank 4.54 4.85 5.05 5.49
SBS Bank Special - ▼2.99 ▼3.05 3.69
The Co-operative Bank - Owner Occ 4.40 3.09 3.35 3.69
The Co-operative Bank - Standard 4.40 3.59 3.85 4.19
TSB Bank 5.34 ▼3.59 ▼3.79 ▼4.19
TSB Special 4.54 ▼2.79 ▼2.99 ▼3.39
Lender Flt 1yr 2yr 3yr
Wairarapa Building Society 4.99 3.95 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.79 ▼2.79 3.39
Median 4.55 3.50 3.79 3.69

Last updated: 25 May 2020 5:00am

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