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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 6.35 5.25 5.45 5.99
ANZ 6.34 5.59 6.05 6.29
ANZ Blueprint to Build - - - -
ANZ Special - 4.99 5.45 5.69
ASB Bank 6.35 ▼4.99 5.45 5.69
Avanti Finance 6.65 - - -
Basecorp Finance 7.25 - - -
Bluestone 6.89 - - -
BNZ - Classic - 4.95 5.39 5.69
BNZ - Mortgage One 6.39 - - -
BNZ - Rapid Repay 6.39 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 6.39 5.55 5.99 6.29
BNZ - TotalMoney 6.39 - - -
CFML Loans 7.25 - - -
China Construction Bank - 5.35 5.80 5.99
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - ▼4.89 - -
Co-operative Bank - Owner Occ 6.25 ▼4.99 5.39 ▼5.69
Co-operative Bank - Standard 6.25 ▼5.49 5.89 ▼6.19
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 5.35 5.85 -
Heartland Bank - Online 4.60 ▼4.79 5.29 5.39
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.50 5.60 6.00 -
HSBC Premier 6.34 5.09 5.34 5.59
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 6.00 ▼4.79 5.15 ▼5.69
Kainga Ora 5.85 5.31 5.58 5.97
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 6.00 5.95 6.45 6.79
Kiwibank - Offset 6.00 - - -
Kiwibank Special - 4.95 5.45 5.89
Liberty 4.84 - - -
Lender Flt 1yr 2yr 3yr
Nelson Building Society ▲6.95 5.55 6.15 -
Pepper Money 5.29 - - -
Resimac 5.59 6.54 6.44 6.98
SBS Bank 6.29 ▼5.39 ▼5.79 5.99
SBS Bank Special - ▼4.89 ▼5.29 5.49
Select Home Loans 6.89 - - -
TSB Bank 7.05 ▼5.65 6.09 6.39
TSB Special 6.25 ▼4.85 5.29 5.59
Unity 5.65 4.95 5.55 -
Wairarapa Building Society 6.49 5.55 6.15 -
Westforce credit union - Special - 5.35 5.85 -
Lender Flt 1yr 2yr 3yr
Westforce credit union - Standard 5.85 6.05 6.55 -
Westpac 6.39 ▼5.55 6.05 ▼6.29
Westpac - Offset 6.39 - - -
Westpac Special - ▼4.95 5.45 ▼5.69
Median 6.34 5.33 5.79 5.93

Last updated: 11 August 2022 8:40am

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