Lenders – One Payday http://onepayday.com/ Thu, 30 Jun 2022 12:19:41 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://onepayday.com/wp-content/uploads/2021/11/icon-2-150x150.png Lenders – One Payday http://onepayday.com/ 32 32 Note to money lenders – Government proposes to lower usury rate caps by end of 2022 https://onepayday.com/note-to-money-lenders-government-proposes-to-lower-usury-rate-caps-by-end-of-2022/ Thu, 30 Jun 2022 09:57:31 +0000 https://onepayday.com/note-to-money-lenders-government-proposes-to-lower-usury-rate-caps-by-end-of-2022/ It is an offense under the Money Lenders Ordinance (Cap. 163;”MLO”) to lend or offer to lend money at an effective rate of interest in excess of 60% per annum. Moreover, a loan agreement whose effective interest rate exceeds 48% per annum is presumed to be exorbitant and the court has the power to reopen […]]]>

It is an offense under the Money Lenders Ordinance (Cap. 163;”MLO”) to lend or offer to lend money at an effective rate of interest in excess of 60% per annum. Moreover, a loan agreement whose effective interest rate exceeds 48% per annum is presumed to be exorbitant and the court has the power to reopen the transaction to do justice between the parties. These rates have been in effect since the MLO in its current form came into force in 1980, but the government recently submitted a resolution to the Legislative Council to lower these usurious interest rate ceilings from, respectively, 60% per annum to 48% per year. , and 48% per year to 36% per year.

The proposed reductions were introduced following consideration of changes in the interest rate environment and money lending industry in Hong Kong since, as mentioned, the current two interest limits were set in 1980 For example, the best lending rate for lenders in Hong Kong has dropped significantly from around 14% per year in 1980 to around 5% per year today. Typical annualized percentage rates charged by credit card issuing banks at the end of 2021 were mostly in the range of around 33% to 41%. The number of approved lenders has also increased rapidly over the past decade. The government therefore sought to reduce statutory interest rates in order to better protect borrowers. The impact of the current inflationary environment on these rate changes remains to be seen.

The proposal will be presented to the Legislative Council in July 2022 and, if passed, will come into force on December 30, 2022.

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Revenue from digital lenders grew 37% in the first year of the pandemic https://onepayday.com/revenue-from-digital-lenders-grew-37-in-the-first-year-of-the-pandemic/ Tue, 28 Jun 2022 12:02:38 +0000 https://onepayday.com/revenue-from-digital-lenders-grew-37-in-the-first-year-of-the-pandemic/ Digital lending companies around the world saw their revenues increase by 37% in the first year of the pandemic, according to a new study. A report from the Cambridge Center for Alternative Finance, the World Bank Group and the World Economic Forum found that fintechs around the world were broadly resilient to the Covid-19 crisis. […]]]>

Digital lending companies around the world saw their revenues increase by 37% in the first year of the pandemic, according to a new study.

A report from the Cambridge Center for Alternative Finance, the World Bank Group and the World Economic Forum found that fintechs around the world were broadly resilient to the Covid-19 crisis.

Digital lending was the second largest segment by transaction values ​​in 2020, accounting for 20% of the market, behind digital payments.

Read more: A fifth of Asia-Pacific countries have banned P2P lending

Excluding the Chinese market, which saw a regulatory crackdown before the pandemic, global loans issued by digital lenders grew from $87 billion in 2019 to $104 billion in 2020.

“Despite the pandemic, most digital lending models grew overall in 2020,” the report said. “Only a few of the smaller trading models reported declines.”

The peer-to-peer consumer lending industry remained the world’s largest business model among digital lenders, according to the report. However, the segment’s year-over-year growth was modest, largely due to the decline of the Chinese market from $34.02 billion to $35.08 billion.

Read more: CCAF launches study on ASEAN fintech trends

Other business models grew at a faster rate in 2020, including P2P business lending which grew from $7.62 billion to $15.91 billion.

“The growth of business finance in light of the pandemic is not entirely surprising, given that digital lending companies have functioned as delivery or implementation partners in government programs to support the sector. of small and medium-sized enterprises,” the report said.

“Examples include the SBA Paycheck Protection Program in the US, the Coronavirus Business Interruption Loan Program in the UK, and the Coronavirus Small and Medium Business Guarantee Program in Australia, all of which have allowed several digital fintech lenders to issue loans through these programs.

Read more: The CCAF launches a research program on cryptoassets

The study included data from 1,448 fintech platforms operating in 192 regions around the world. Digital lending companies made up 44% of respondents.

The report also revealed that the overall fintech ecosystem has grown despite the challenges of the pandemic. From 2019 to 2020, the transaction value of fintech platforms aimed at retail increased by 47%, bringing in $357.77 billion in 2019 and $526.21 billion in 2020.

“Overall, the results indicate that the fintech industry has been resilient and business has continued to grow, although it is important to note that the current global macroeconomic and geopolitical situation adds stressors to the sector that need to be monitored,” the report said. . “Specific factors influenced growth, particularly jurisdiction of operation, level of lockdown stringency and participation as government relief program delivery partners.”

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Cloud banking technology helps innovative SME lenders disrupt https://onepayday.com/cloud-banking-technology-helps-innovative-sme-lenders-disrupt/ Tue, 28 Jun 2022 00:33:00 +0000 https://onepayday.com/cloud-banking-technology-helps-innovative-sme-lenders-disrupt/ Prospa turned to Mambu to provide the firepower needed to sustain strong loan demand and reach new markets. Trust in technology allows the team to focus on delivering financial solutions to professional clients quickly, says Malak. “Small business owners who are short on time turn to Prospa for quick access to funds to cover cash […]]]>

Prospa turned to Mambu to provide the firepower needed to sustain strong loan demand and reach new markets.

Trust in technology allows the team to focus on delivering financial solutions to professional clients quickly, says Malak.

“Small business owners who are short on time turn to Prospa for quick access to funds to cover cash flow shortfalls, such as employee salaries, buying stock or paying suppliers to move the business forward. ‘company. Others need capital to invest in growth,” says Malak.

“Technology has been key in ensuring that application processes are smooth and without delays to ensure quick results for small business owners. It has also allowed us to focus on the specific needs of more small businesses, while reducing operational costs and environmental impacts,” says Malak.

The lending industry is slower to adopt the cloud

The banking and payments landscape has undergone dramatic changes in recent years due to the rapid proliferation of new technologies.

By comparison, the lending industry has been slower to respond, with many operators sticking to a more traditional, hands-on approach, despite changing customer expectations.

Although some SME lenders are embracing cloud technology in a bid to future-proof their businesses, including Prospa and Lumi, some of the big names in Australia’s business lending market could be left behind if they don’t embrace the change, warns Paul Apolony, the Australia and New Zealand Managing Director, of cloud banking platform, Mambu.

He blames a broad lack of understanding of the benefits that cloud technology offers lenders for the inability to innovate. “Lenders need to start their own digital transformations or they risk being left behind,” says Apolony.

“Cloud technology is already in the market and used by lenders around the world, but there has been some reluctance among Australian lenders to make the switch, despite the many benefits,” he says.

Faster, simpler, more convenient

Mambu enables SME lenders to serve a more diverse range of business customers, offer more flexible lending options, and create products with fewer paperwork and administrative requirements.

It also translates to a much faster approval process for borrowers and costs less for both lender and borrower, Apolony says.

“Lenders are realizing that we’re entering a tougher lending market that they need to streamline the application process so borrowers can get money into their account quickly,” he says.

Automating the process reduces risk and means borrowers can access funds faster. By embracing the cloud, SME lenders can serve a more diverse range of business customers, as the technology allows them to offer more flexible lending options faster and at lower cost, he says.

“Whether they’re running a micro or mid-sized business, using the cloud can help lenders remove much of their manual processing, which can be slow and prone to human error,” says Apollony.

“Simply put, it’s faster, simpler, more accurate and cheaper. Cloud technology also allows lenders to scale without the usual infrastructure overhead, meaning there’s less risk for lenders looking to grow their business,” says Apolony.

Mambu is the world’s only true SaaS cloud banking platform. Launched in 2011, Mambu accelerates the design and construction of almost any type of financial offering for banks of all sizes, lenders, fintechs, retailers, telcos and more. Our unique composable approach means that independent components, systems and connectors can be assembled in any configuration to meet business needs and end-user demands. Mambu has 900 employees supporting 230 customers in over 65 countries. In Australia, Mambu’s customers include CBA, Prospa, Bluestone, Lumi, Nimble, Shaype and Tyro.

www.mambu.com

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PE real estate fund, lenders don’t see much impact from rate hikes on home sales https://onepayday.com/pe-real-estate-fund-lenders-dont-see-much-impact-from-rate-hikes-on-home-sales/ Mon, 27 Jun 2022 21:10:00 +0000 https://onepayday.com/pe-real-estate-fund-lenders-dont-see-much-impact-from-rate-hikes-on-home-sales/ By Raghavendra Kamath According to real estate fund managers and lenders to property developers, the rise in repo rates and the subsequent increase in mortgage rates should have a marginal impact on residential sales. The Reserve Bank of India (RBI) raised interest rates cumulatively by 90 basis points in the last two MPC meetings to […]]]>

By Raghavendra Kamath

According to real estate fund managers and lenders to property developers, the rise in repo rates and the subsequent increase in mortgage rates should have a marginal impact on residential sales.

The Reserve Bank of India (RBI) raised interest rates cumulatively by 90 basis points in the last two MPC meetings to control inflation.

However, fund managers believe that the rate hike would not have much impact.

“With RBI raising repo rates to control rising inflation, we may see an impact on demand in the near term, but we believe the fundamentals of the sector remain strong and the sector is on track for a structural recovery,” said Sharad Mittal, Director and Managing Director of Motilal Oswal Real Estate.

A confluence of factors, such as rock bottom prices, watered down offers from developers, interest rates at their lowest in a decade and, above all, the strong feelings and emotional value around home ownership , have led to a sharp increase in new launches and absorption rate in the residential real estate segment over the past two years, Mittal said.

Among the residential real estate segments, the major impact is expected to be in the low cost housing segment, as increases in interest rates will lead to increased EMIs, which will impact affordability, a- he declared.

Amit Bagri, CEO of Kotak Mahindra Investments (KMIL), said that a 100 basis point (bps) increase in the mortgage rate translates to an increase of `5,000 per month (for a 20-year loan) for a loan amount of `1 crore. This may not have a significant impact on the purchase decision.

“At the same time, a decision to buy a house does not only depend on mortgage rates. A buyer who has made the decision to buy and is in the process of identifying a property may be less impacted than the still ‘undecided’ buyer,” Bagri said.

Considerations for first-time home buyers differ from those for someone looking to upgrade their home. That said, a further increase in interest rates could limit the ability of developers to increase home prices, as a combination of higher home prices and mortgage rates will impact affordability and therefore housing growth. home sales, he said.

However, Amit Goenka, managing director and managing director of Mumbai-based fund manager Nisus Finance, said larger EMIs will dampen buying sentiment as revenue growth is expected to be moderate. “So while home sales are expected to slow, this year may not yet show a massive decline or slowdown,” Goenka said.

He said sales have increased nearly 100% since last year. An estimated 300,000 homes were sold across India in FY22 compared to 150,000 in FY21. This figure is expected to drop by 15% to less than 250,000 homes in FY21. exercise 23.

“Developers need to be careful with the specs and perhaps cut down on the frills. Buyers will start to become more cost-conscious. Configurations had gotten bigger, which now may require including smaller functional units as well. size,” he said.

Goenka changed its strategy to adapt to the new environment. “The fund’s return expectations have increased. Although developers are unable to commit to higher interest rates, an equity incentive element is introduced. Project margins are also being stress tested more cautiously when approving investments,” he said.

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BB asks lenders to ensure third-party environmental assessment for financing infrastructure projects https://onepayday.com/bb-asks-lenders-to-ensure-third-party-environmental-assessment-for-financing-infrastructure-projects/ Sun, 26 Jun 2022 16:30:00 +0000 https://onepayday.com/bb-asks-lenders-to-ensure-third-party-environmental-assessment-for-financing-infrastructure-projects/ The Bangladesh Bank has ordered all banks and non-banking financial institutions to ensure a third-party assessment of the likely environmental and social impact before financing any infrastructure project. To that end, the central bank updated its guideline, titled The Management of Environmental and Social Risks, and issued it to chief executives of financial institutions on […]]]>

The Bangladesh Bank has ordered all banks and non-banking financial institutions to ensure a third-party assessment of the likely environmental and social impact before financing any infrastructure project.

To that end, the central bank updated its guideline, titled The Management of Environmental and Social Risks, and issued it to chief executives of financial institutions on Sunday.

“We published the guidelines for banks and financial institutions in 2017. Following the experience of implementing the guidelines, the central bank is now issuing its updated version to establish industry best practices,” the governor said. of Bangladesh Bank, Fazle Kabir, to the media.

He hoped banks and financial institutions would effectively enforce the guidelines.

According to the updated guidance, a third-party environmental and social impact assessment, also known as an ESIA, will generally be organized by the client at their own expense and submitted with the loan application.

The banks or financial institutions will ensure that the third party is qualified based on the criteria established by Bangladesh Bank for this purpose.

The infrastructure projects defined in the guidelines are those related to power generation, supply, pipeline in the electricity category; roads, bridges, tunnels, airports, ports, railways, terminals and depots, inland waterways in transport categories; economic zones and export processing zones in the category of industry, fixed lines, transition lines and pylons, satellites and others in communication; real estate, commercial buildings in land use categories, etc.

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Crypto miners pose risk to lenders as ‘crypto winter’ continues to weigh on business https://onepayday.com/crypto-miners-pose-risk-to-lenders-as-crypto-winter-continues-to-weigh-on-business/ Sat, 25 Jun 2022 11:06:00 +0000 https://onepayday.com/crypto-miners-pose-risk-to-lenders-as-crypto-winter-continues-to-weigh-on-business/ According to a Bloomberg report on Friday, $4 billion in loans, which are backed by crypto-mining equipment, are facing potential default risk. The development comes on the back of a turbulent market that has wiped billions from the global crypto market cap over the past few weeks. And as a result, according to analysts cited […]]]>

According to a Bloomberg report on Friday, $4 billion in loans, which are backed by crypto-mining equipment, are facing potential default risk.

The development comes on the back of a turbulent market that has wiped billions from the global crypto market cap over the past few weeks. And as a result, according to analysts cited by the report, some crypto miners may struggle to repay loans secured by their mining equipment or rigs, posing higher credit risk for lenders.

A prolonged winter led to under-secured loans

Bitcoin, which has slipped below crucial $20,000 levels more than once in the past week, has reportedly halved the value of loan collateral. Notably, over the past month, the king’s coin has plunged almost 30% according to data from CoinGecko.

Luka Jankovic, Head of Lending at Galaxy Digital, told Bloomberg, “Bitcoin miners, basically, are feeling pain.”

The report points out that few miners have ever defaulted on these loans, which weighs on others.

“A lot of trades have turned negative net IRR at these levels. Machine values ​​have fallen and are still in price discovery mode, which is compounded by the volatility in energy prices and the limited supply of rack space,” added Jankovic.

For example, Core Scientific Inc. reportedly liquidated its holdings of around 2,000 Bitcoin last month to cover operational costs. Additionally, Bitfarms Ltd. sold 3,000 BTC for $62 million to cover part of its $100 million loan with Galaxy Digital Holdings Ltd., the report said.

And with collateral margins falling in value, a prolonged crypto winter could likely create a default ripple effect.

At current levels, data from Luxor Technologies Corp. revealed that the value of Bitmain’s S19 mining rig lost 47% of its peak value of $10,000 in November 2021.

That said, with lenders significantly under-secured, Ethan Vera, co-founder of Luxor Technologies, told the outlet: “They [Lenders] are nervous about their loan portfolios, especially those with high collateral ratios. »

Market downturn led to reduced margins

Recent mining Data even confirmed that the market crash reduced the electricity consumption of cryptocurrency users by around 50%.

The Guardian cited a Digiconomist report which found that the Bitcoin network’s electricity consumption had been reduced by a third from its peak on June 11, dropping to 131 annualized terawatt-hours per year.

And as mining rewards dwindle with the fall in the price of Bitcoin, Alex de Vries of Digiconomist told the Guardian: “It literally puts them out of business, starting with those operating with sub-optimal equipment or under suboptimal circumstances. -optimal”.

“For bitcoin mining equipment, this is a big problem, because these machines cannot be reused to do other things. When they are not profitable, they are useless machines. You can keep them hoping that the price will recover or sell them for scrap,” he added.

That said, Jaran Mellerud, mining analyst at Arcane Crypto, echoed the same sentiments to Bloomberg, adding that reduced mining revenue is making loan repayments more difficult without liquidating digital assets.

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All information contained on our website is published in good faith and for general information purposes only. Any action the reader takes on the information found on our website is strictly at their own risk.

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Predatory lenders make money from rising gas and food prices https://onepayday.com/predatory-lenders-make-money-from-rising-gas-and-food-prices/ Fri, 24 Jun 2022 15:59:00 +0000 https://onepayday.com/predatory-lenders-make-money-from-rising-gas-and-food-prices/ Most want to avoid payday loans, which offer quick cash against future paychecks without a credit check and come with an interest rate of over 500%. But rapidly rising prices for food, fuel and rent leave them with few options. To payday lenders, Nevertheless, they announce happy days and good times to come. “Low unemployment […]]]>

Most want to avoid payday loans, which offer quick cash against future paychecks without a credit check and come with an interest rate of over 500%. But rapidly rising prices for food, fuel and rent leave them with few options.

To payday lenders, Nevertheless, they announce happy days and good times to come.

“Low unemployment and inflation generally mean that consumers may need loans to obtain additional capital to manage unexpected spikes and expenses while earning money to repay those loans,” David said. Fisher, CEO of the short-term subprime lender. Enova (ENV) said during a call for results in May. The company, an online-only lender, beat quarterly profit estimates by 7.7%.

Enova declined to comment for this story.

Given the economic dynamics at play, Fisher said his company “significantly leaned into demand through our marketing efforts” and spent more to attract new customers. It paid off. About 44% of all loans went to new customers in the last quarter, he said.

This surge in new borrowers came as U.S. consumer inflation hit its highest level in more than four decades and Americans struggled to put food on their tables and gasoline in their tanks.

Work to get to work

The national average for a gallon of gasoline is just under $5, a 61% increase since last year. The jump comes as many employers require workers to return to work in person. The federal minimum wage, meanwhile, still sits at $7.25 an hour, where it has been since 2009. Low-wage workers must work for about 14 hours to fill their reservoir.
About two-thirds of Americans now live paycheck to paycheck, a June LendingClub survey found. This figure jumps to 82% among workers earning less than $50,000.
The average credit score of low-income people in the United States is also falling, according to LendingClub data. About 40% of Americans earning less than $50,000 and living paycheck to paycheck have a subprime credit score below 650, which prevents them from getting a loan from a traditional lending institution or qualify for additional credits. credit. The average credit score in the United States is 714, according to Experian.

For these Americans, high interest payday loans are still readily available. These small loans, usually between $100 and $1,000, are available in more than half of lightly regulated US states. Proof of income and a bank account are all most borrowers need to walk out with cash in hand.

Current data that tracks the number of payday loans has yet to be released, but based on past trends, there’s likely an increase in borrowing, said Alex Horowitz, senior consumer finance project manager. from Pew. “Our survey data shows that approximately 70% of payday loan borrowers use the loan primarily for day-to-day expenses and to meet increased or volatile expenses.”

The debt trap

These loans are often incredibly expensive, but borrowers either don’t have the financial knowledge to research alternatives or don’t think they have any other option. There is currently no federal cap on maximum interest rates for small loans. Not all states allow them, and it is up to those states to decide if they will implement their own caps.

In the 32 US states that allow payday loansaverage annual interest rates range from 200% in Minnesota to 664% in Texas.
Borrowers often cannot repay the full loan amount when due, usually in two to four weeks, leading them to take out a second loan with additional fees. This creates a cycle of indebtedness that is difficult to break. Nearly 1 in 4 payday loan recipients take out additional loans nine times or more, found the Consumer Financial Protection Bureau.
Studies show that black and Latino communities are disproportionately targeted by high-cost loan providers. In Michigan, where the average payday loan interest rate is 370%, there are 7.6 payday stores per 100,000 people in areas with more than a quarter of the population black and of Latinos. This is about 50% more than in other fields, according to data provided by the Center for Responsible Lending.

Companies that offer high-cost loans say they are providing a needed service to low-income communities by providing loans to Americans that traditional banks refuse to serve. They claim that high interest rates are necessary because of the high risk of default. But consumer advocates say it’s a false narrative.

Seven major U.S. banks, including Bank of America, Wells Fargo and Truist, have created programs that offer small-dollar borrowing options with low annual interest rates, Horowitz said. They plan to look at bank history — not credit scores — to determine who qualifies for loans.

“There are 18 states and the District of Columbia that have banned payday loans and have survived very well without these predatory loan products,” said Nadine Chabrier, senior policy adviser at the Center for Responsible Lending. “There are fair and responsible loan products that have low interest rates and fees that are available for people to use.”

Shortly after the Covid-19 pandemic hit the United States, the Consumer Financial Protection Bureau repealed significant parts of a 2017 rule that required lenders to assess consumers’ ability to repay their loans. The rule, they said, would have wiped out much of the money they make from borrowers who default on their loans. By repealing parts of the rule, the CFPB said it would ensure “the continued availability of low-cost loan products to consumers who demand them.”

In a blog post, Former CFPB director Dave Ueijo expressed concern about the rule changes, saying he had issues with “any lender’s business model that depends on consumers being unable to repay their loans”.

Buy now pay later

Proponents are also concerned about new forms of lending that have emerged in recent years that are generally far less regulated than even payday loans.

According to the Center for Responsible Lending, Buy Now, Pay Later (BNPL) companies have seen their total market share increase by 200-350% over the past two years. Now, companies like Klarna and Zip are teaming up with Chevron and Texaco to let Americans fill their tanks now and pay in installments over six weeks.

BNPL’s clients tend to be Millennials and Gen Z and two-thirds of applicants are subprime borrowers, According to research by Marshall Lux, researcher at the Harvard Kennedy School.

These companies do not present themselves as lenders. BNPL is not credit but debit, with refunds taken automatically from customers’ bank accounts and without interest or charges.

In California, 91% of consumer loans made in 2020 were BNPL loans, and 24% of financially vulnerable BNPL recipients report difficulty making payments.

BNPL’s lenders are not required by law to determine a borrower’s ability to repay their loans. There are no regulations regarding the disclosure of late payment fees, account reactivation or rejected payments.

“If people are using a credit product like this for their basic needs, I’m worried,” Chabrier said. She is concerned that BNPL clients may open several loans at once, they might lose track or have trouble repaying them all.

“A lot of people use buy now and pay later to stack their purchases from multiple vendors,” Chabrier said. “Because of the lack of subscription and whether or not they can afford these items, it becomes really unaffordable for them.”

Klarna caps late fees at 25% of the purchase amount, a far cry from the 400% interest rates charged by payday lenders, but Chabrier sees this as a lesser symptom of a larger problem.

“They’re continuing this process of extracting money from low-income people,” she said. “If people have less purchasing power with their salary, it will only get worse.”

Back in Mississippi, which has the highest poverty rate in the nation, Jones struggled to keep distressed callers out of the hands of loan sharks and into financial education programs sponsored by local banks. But it’s hard to work against so many payday lenders with huge advertising budgets, she said. The state has the highest concentration of payday lenders per capita in the nation, mostly in low-income areas or in communities of color.

Payday lenders are so prevalent in Mississippi, Jones said, that they outnumber McDonald’s restaurants by more than 5 times.

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Rent-to-own financing: what lenders need to see https://onepayday.com/rent-to-own-financing-what-lenders-need-to-see/ Thu, 23 Jun 2022 23:00:11 +0000 https://onepayday.com/rent-to-own-financing-what-lenders-need-to-see/ It’s no secret that single family rentals (SFR) and houses for rent (BTR) are in high demand. This type of product offers households plenty of space and mobility, without worrying about the high costs of home ownership. As more tenants want to live in SFRs, more developers are jumping into the space to offer BTR […]]]>

It’s no secret that single family rentals (SFR) and houses for rent (BTR) are in high demand. This type of product offers households plenty of space and mobility, without worrying about the high costs of home ownership. As more tenants want to live in SFRs, more developers are jumping into the space to offer BTR homes and communities.

John Hutchinson of Trez Capital

We see two basic types of BTR products. First, single-family homes built on flat lots that make up an entire neighborhood of rental homes due to a developer’s control of multiple lots. The second is what we call “horizontal multifamily” – these homes are not built on flat lots but are flat like an apartment project would be flat, usually built on commercial land that is rezoned to allow for this type of product.

The demand for financing is strong, but this asset class is still relatively new, so there is great uncertainty about how to obtain financing for development. BTR houses are different from apartments and houses for sale. For this reason, lenders want the following from BTR borrowers.

Live

Lenders want assurances that developers have a track record with similar types of properties. “Similar,” in this case, means the developers have previous experience with single-family homes for sale or rent. Although the structures being developed are intended for rental rather than sale, the development of three and four bedroom homes requires different knowledge of zoning, plating, labor, types of products and construction requirements, compared to multi-family structures.

Numbers

Developers involved in the sale of single-family homes can offer lenders pre-sales and anticipated sales figures. This is not the case for BTR developers. BTR borrowers must offer measures of net operating income, as well as projected rental rates and expected increases. Other figures may include loan-to-value estimates and capitalization rates.

Market conditions

Lenders want to know that BTR developers understand the region and market conditions in which they are proposing to build. This requires well-researched market research focused on the following:

Provide. In this case, “supply” refers to rental units, as opposed to homes for sale. Information should consider single-family rental homes and apartments located within a 10-mile radius of the target development site. It is important to include all apartments, including those currently under construction.

Request. Just as important as providing supply figures is highlighting measures of housing demand. Basic information should include population growth (especially families with children) and employment growth in the area. The lender wants to be sure that there are enough households in the target area to absorb the supply and that those households can afford to pay the asking rent. Psychographic information is also important, as it explains why households would be attracted to BTRs over apartments.

School districts. School district rankings are indispensable in this study, due to BTR household demographics. Families with children are likely to be the first tenants; these families will want to be in neighborhoods with higher ranked schools. If these schools are close to the targeted development site (within walking distance), this is another added advantage to highlight.

Neighborhood amenities. Ideal neighborhood amenities for BTRs should include community retail businesses (groceries and pharmacies), healthcare facilities, and family restaurants and entertainment. An added benefit includes pocket parks, recreational facilities, and hiking and biking trails.

Capital is available to finance BTR’s developments. We were one of the first lenders to recognize this opportunity back in 2017 and are now one of the leaders in the United States when it comes to financing this type of product. We have expanded our financing in the space, and there are indications that this type of product will be in demand for the foreseeable future, but lenders are looking at different home rental requirements. A borrower’s ability to access BTR financing depends on proving to the lender that the product will appeal to the target audience and generate sufficient cash flow.

John Hutchinson is Vice President and Global Chief Creative Officer of Trez Capital.

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Millions more Brits lock credit from traditional lenders https://onepayday.com/millions-more-brits-lock-credit-from-traditional-lenders/ Thu, 23 Jun 2022 06:00:46 +0000 https://onepayday.com/millions-more-brits-lock-credit-from-traditional-lenders/ Millions more Britons can no longer access credit from traditional lenders as ‘financial exclusion’ rises One in five people say they feel excluded from the financial system Around 20 million people in the UK struggle to access credit Nearly half of borrowers with loans report making minimum monthly payments 18% of people had to borrow […]]]>

Millions more Britons can no longer access credit from traditional lenders as ‘financial exclusion’ rises

  • One in five people say they feel excluded from the financial system
  • Around 20 million people in the UK struggle to access credit
  • Nearly half of borrowers with loans report making minimum monthly payments
  • 18% of people had to borrow money because of the pandemic

More than a third of Britons say they are financially unprepared for an emergency and more than a quarter say they are worse off than before the pandemic, according to a new study.

Access to affordable credit can be important for people’s financial stability, but one in five people report feeling excluded from the financial system – around 11 million people – according to London lender Plend’s 2022 Financial Inclusion Report.

This rises to 38% of people from a black ethnic group and 32% of all ethnic groups who feel they cannot access financial services in the UK.

The Covid-19 pandemic has had an impact on finances, with 18% of respondents saying they had to borrow money due to the pandemic.

Three in five respondents to the survey, conducted in January by Opium Research, say they use some form of credit.

Credit cards account for the majority of borrowing, followed by buy-now-pay-later loans.

However, despite the large number of people using credit, many are struggling to repay their loan.

Half of those with a loan said they struggled to repay it, compared to 38% of those with a credit card and 37% of BNPL users.

The average amount borrowed through a loan is £8,200, with men borrowing significantly larger amounts (£9,952) than women (£6,347).

Loan interest rates averaged 16.3% according to respondents, with the figure rising to 21.6% for those under 34.

Almost a fifth of respondents said they did not know the interest rate they were currently paying on their loans.

According to the financial wellbeing and education charity money charity346 people a day were declared insolvent or bankrupt in England and Wales from February to April 2022. This equates to one person every four minutes.

Nearly half of those who use credit say they simply repay minimum payments each month, and one in ten are unable to manage even minimum payments.

This, says Plend, indicates an absence of affordable credit products on the market.

Plend defines financial exclusion as: when a person is penalized for past events beyond their control, has to pay significantly more for financial services, and is more likely to experience bankruptcy or individual voluntary arrangements.

Also, being more dependent on unreliable sources of financial support such as friends or family, leading to increased vulnerability and dependency.

Of those who felt financially excluded, 23% accepted a higher interest credit product.

Men borrow more with an average loan of nearly £10.00 compared to around £6,300 for women.

Men borrow more with an average loan of nearly £10.00 compared to around £6,300 for women.

In addition, 16% of people who were refused loans even at high interest rates resorted to loan sharks or illegal moneylenders. However, these people represent only 1% of the total population of the United Kingdom.

Research published by PwC in April concluded that 20.2 million people in the UK are struggling to access credit from traditional lenders, an increase of 50% on 2016.

Rob Pasco, Founder of Plend, said: “It is outrageous to see financial discrimination and exclusion on the rise, which is having a detrimental effect on society as a whole and widening the poverty gap.

Having a thin or invisible credit history is just one reason many people are financially excluded from accessing affordable credit products and basic financial services – the lending industry has no succeeded in solving this problem at a time when the need has never been greater due to the cost of life crisis’

Likewise, the survey revealed gaps in the country’s financial literacy. Data indicates that only 41% of adults know their credit score and 60% of the general population do not understand how credit scores are calculated.

According to PWC, 20.2 million people in the UK struggle to access credit from traditional lenders.

According to PWC, 20.2 million people in the UK struggle to access credit from traditional lenders.

MP Yvonne Fovargue, Chair of the All-Party Parliamentary Group on Debt and Personal Finance, commented on the report’s findings saying: “It is the responsibility of banks and the financial sector to demonstrate their willingness to serve the underserved and to the very least to provide a gateway to a more affordable financial future.

“It’s not only the right thing to do, it makes business sense; a better financial future means better customers.

The report comes as households face additional strain on their finances due to rapidly rising inflation and rising energy bills.

In May, food price inflation soared to 8.3% from 7%, an increase of almost £400 a year, its highest level since 2009.

The Institute of Grocery Distribution has warned that people may be skipping meals in a bid to cut spending.

This is at a time when people are still recovering financially from the pandemic.

In the report, 18% of people said they had to borrow money because of the pandemic. This figure rises to 35% for 18-34 year olds and more than doubles to 38% for ethnic minority groups.

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Maple Finance says lenders may have to wait for repayments from borrowers https://onepayday.com/maple-finance-says-lenders-may-have-to-wait-for-repayments-from-borrowers/ Wed, 22 Jun 2022 08:46:00 +0000 https://onepayday.com/maple-finance-says-lenders-may-have-to-wait-for-repayments-from-borrowers/ Lending platform Maple Finance has become the latest company to face liquidity problems. The platform published a update on its website in an article titled “Liquidity Management for Lenders and Borrowers”, saying, “There may be instances where there is not enough liquidity in the pools.” Liquidity issues began this week, although Maple Finance says that […]]]>

Lending platform Maple Finance has become the latest company to face liquidity problems.

The platform published a update on its website in an article titled “Liquidity Management for Lenders and Borrowers”, saying, “There may be instances where there is not enough liquidity in the pools.”

Liquidity issues began this week, although Maple Finance says that as loans mature over the coming weeks, an increase in available capital in the pools due to borrower repayments will allow lenders to proceed. to withdrawals.

He also said that the ability of lenders to earn interest and rewards from the Maple Token (MPL) would not be affected.

Once all withdrawal requests have been processed, delegates in the pool will resume issuing loans. Orthogonal Trading, a cryptocurrency hedge fund, has recognized that there is a $10 million loan to Babel Finance from the Orthogonal USD coin pool on Maple.

Babel halted withdrawals and issued a debt repayment agreement.

The crypto world has come under severe pressure with the recent stock market crash. Many platforms are facing liquidity pressures, pushing many of them to the brink of survival. Even mining companies are struggling, with Canadian firm Bitfarms selling 3,000 BTC to improve liquidity.

Decentralized Finance Protocol (DeFi) Bancor also suspended impermanent loss protection, citing hostile market conditions. It was one of the main features of the platform.

MakerDAO suspended DAI repositories, citing the same reason. And rumor has it that Three Arrows Capital is facing insolvency.

It will take time and a new strategy for companies to recompose and manage the market downturn without further damage.

Such developments are part of the crypto market, although the strong growth in recent years has certainly magnified the setbacks.

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