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Peer2Peer Finance News | July 16, 2018

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LandlordInvest’s loan book shows higher risk profile

LandlordInvest’s loan book shows higher risk profile
Michael Turner

LANDLORDINVEST has increased the riskiness of its loan portfolio since the end of last year, by offering larger loans with higher loan-to-value (LTV) ratios.

The peer-to-peer property lending platform published its loan book on Monday, showing that it had lent £3.77m across 16 loans as of 5 March.

The average loan size stands at £235,516, marking an increase from the £210,535 average loan size the company posted in December 2017, when it first started to publish its loan book.

Furthermore, the average LTV has risen to 67.1 per cent as of Monday, up from 63.7 per cent at the end of last year. Larger loan amounts and a larger portion of a property being financed with debt means lenders are taking a larger risk.

However, investors are being better compensated for the increased risk, with the average investor rate also creeping up.

LandlordInvest’s investors received an average rate of 13.35 per cent in the latest loan book, up from an average of 11.1 per cent in December.

Read more: LandlordInvest hits £2m milestone after completing largest loan to date

“We believe that lenders should be compensated for their risk and as such, rates increase when risk is deemed to be higher,” Filip Karadaghi, LandlordInvest managing director, told Peer2Peer Finance News. “Our loans this year have generally been smaller than average loan amount but with a higher than average LTV and rate.”

All but one loan is either repaid or performing, but the single overdue loan is also LandlordInvest’s largest.

Read more: LandlordInvest reduces secondary market charges after no-fee trial

“I cannot comment on a specific loan for various reasons,” said Karadaghi, “but it is always a concern when a party does not fulfil its contractual obligations. In such an event, we have a number of rights pursuant to the security documents.”

The £740,741 gross loan amount for a seven bedroom semi-detached house in Greater London is now overdue on its payment. It is the largest loan in the portfolio by some way, with the next being a £511,596 performing loan for a terrace house in London.

The overdue loan also has a higher-than-average LTV for the portfolio, at 78 per cent.