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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 5.95 4.85 5.35 5.65
ANZ 5.94 ▲5.95 ▲6.40 ▲6.59
ANZ Blueprint to Build - - - -
ANZ Special - ▲5.35 ▲5.80 ▲5.99
ASB Bank 5.85 ▲5.35 ▲5.80 ▲5.99
Avanti Finance 5.95 - - -
Basecorp Finance 6.95 - - -
Bluestone 5.89 7.49 8.09 8.19
BNZ - Classic - ▲5.35 ▲5.69 ▲5.99
BNZ - Mortgage One 5.94 - - -
BNZ - Rapid Repay 5.94 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 5.94 ▲5.95 ▲6.29 ▲6.59
BNZ - TotalMoney 5.94 - - -
CFML Loans 6.45 - - -
China Construction Bank 5.50 5.40 6.14 6.40
China Construction Bank Special - 4.45 5.19 5.45
Co-operative Bank - First Home Special - ▲4.75 - -
Co-operative Bank - Owner Occ 5.85 ▲4.85 ▲5.35 ▲5.65
Co-operative Bank - Standard 5.85 ▲5.35 ▲5.85 ▲6.15
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 4.95 5.45 -
Heartland Bank - Online 4.10 ▲4.40 ▲4.90 ▲5.10
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.10 5.00 5.75 -
HSBC Premier 5.89 4.39 5.15 5.39
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.25 4.39 5.09 5.45
Kainga Ora 5.43 4.57 5.58 5.85
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 5.50 5.85 6.19 6.39
Kiwibank - Offset 5.50 - - -
Kiwibank Special 5.00 4.85 5.19 5.39
Liberty 4.84 - - -
Lender Flt 1yr 2yr 3yr
Nelson Building Society 6.45 ▲5.55 ▲6.15 -
Pepper Money 4.49 - - -
Resimac 6.19 5.60 6.16 6.29
SBS Bank 5.79 5.05 5.69 5.89
SBS Bank Special - 4.55 5.19 5.39
Select Home Loans 4.09 4.29 4.86 5.09
TSB Bank 5.59 5.14 5.79 6.15
TSB Special 4.79 4.34 4.99 5.35
Unity 5.65 4.95 5.55 -
Wairarapa Building Society 5.74 4.95 5.75 -
Westpac 5.94 ▲5.95 ▲6.29 ▲6.59
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.94 - - -
Westpac Special - ▲5.35 ▲5.69 ▲5.99
Median 5.85 5.00 5.69 5.99

Last updated: 23 June 2022 9:02am

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