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Investors get chance to fund home loans through Squirrel; Harmoney exits

Squirrel has opened up its mortgage lending book to peer-to-peer funders, providing access to retail investors as Harmoney pulls out of the P2P market.

Thursday, February 13th 2020, 6:30PM 1 Comment

Squirrel, led by chief executive John Bolton (pictured), has made changes to its P2P platform, and will welcome retail investors to invest in home loans for the first time. The firm already lets P2P investors back its personal loans. 

The financial services company said it will "make it easier and more accessible for retail investors to get better returns on their money".

Squirrel has already funded a number of mortgages that will be available to P2P investors in the secondary market. P2P investors will be able to invest their money from March onwards.

Squirrel's Dave Tyrer told TMM Online the company's business model would reduce some of the complications faced by rival P2P players.

"We believe the peer to peer model we operate with a reserve fund in place reduces some of the complications the fractionalisation model used by other p2p lenders. This makes it easier for investors, and in turn reduces the cost of running our business in a relative sense. To date, no Squirrel investors have lost any principle or interest repayments, which tends to reduce their concerns."

Tyrer believes Kiwi investors are "underserved" with products that provide access to low-risk mortgages. 

"We think we can continue to be successful through offering both the borrower and investor great service, quality products, and do this with a relatively low cost business model," he added.

The company said funding for P2P mortgages will carry lower risk than personal loan borrowers, with returns lower than personal loan investments.

Interest rates are expected to range from 4% for residential home loans, 5% for business property loans, and between 6%-7% on personal loans.

As new investments become available, Squirrel will match investment orders "without delays" it said.

Squirrel's expansion of its P2P business comes as Harmoney withdrew from its P2P lending business today. Harmoney announced that it would fund all future loans through the wholesale market, delivering a blow to investors.

Harmoney says no new investors will be brought on board after February 13, while no new investments will be processed from April. 

Harmoney chief executive David Stevens said his company had "disrupted the personal finance market and created better outcomes for borrowers and lenders". Stevens added: "We believe we have even played a part in lowering the cost of borrowing."

Tags: Squirrel

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Comments from our readers

On 13 February 2020 at 9:59 pm Smallchange2020 said:
As a long term investor with Harmoney, I'm gutted. For all their rhetoric about looking after Kiwis, they are deserting us for the large institutions who ultimately are sending money off shore. Just another kick in the guts for the little guy.

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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 3.55 3.85 4.49
ANZ Special - 3.05 3.35 3.99
ASB Bank 4.45 ▼3.55 3.89 3.99
ASB Bank Special - ▼3.05 3.39 3.69
Bluestone 4.44 4.44 4.29 4.34
BNZ - Classic - ▼3.09 ▼3.35 3.69
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 ▼3.75 ▼4.10 4.55
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - ▼3.15 ▼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 ▼2.95 ▼3.09 ▼3.50
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 3.94 4.08 4.39
Kiwibank 4.40 3.84 4.14 4.40
Kiwibank - Capped - - - -
Kiwibank - Offset 4.40 - - -
Kiwibank Special - 3.09 3.39 3.65
Liberty 5.69 - - -
Lender Flt 1yr 2yr 3yr
Napier Building Society - - - -
Nelson Building Society 4.95 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.45 3.89 3.94
RESIMAC Special - - - -
SBS Bank 4.54 4.85 5.05 5.49
SBS Bank Special - ▼3.09 ▼3.39 ▼3.69
The Co-operative Bank - Owner Occ 4.40 ▼3.25 ▼3.45 ▼3.69
The Co-operative Bank - Standard 4.40 ▼3.75 ▼3.85 ▼4.19
Lender Flt 1yr 2yr 3yr
TSB Bank 5.34 ▼3.89 ▼4.15 ▼4.49
TSB Special 4.54 ▼3.09 ▼3.35 ▼3.69
Wairarapa Building Society 4.99 3.95 ▼3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼3.09 ▼3.39 3.69
Median 4.60 3.65 3.89 3.99

Last updated: 27 March 2020 3:09pm

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