{"id":195113,"date":"2014-10-16T15:47:38","date_gmt":"2014-10-16T12:47:38","guid":{"rendered":"https:\/\/www.bondora.com\/blog\/?p=909"},"modified":"2014-10-16T15:47:38","modified_gmt":"2014-10-16T12:47:38","slug":"hidden-opportunity-longer-term-loans","status":"publish","type":"post","link":"https:\/\/goandgrow.eu\/en\/blog\/hidden-opportunity-longer-term-loans\/","title":{"rendered":"Hidden opportunity in longer-term loans"},"content":{"rendered":"

\u00a0In general, longer maturity of a loan is usually associated with higher risk; thus, some investors avoid investing into loans that have a duration of over 36 months. However, over 50% of the loans that came to Bondora marketplace this year had duration of over 36 months<\/strong>, so we decided to analyze if investors are not overlooking an attractive opportunity that is hidden in longer duration loans.<\/p>\n

\n\n\n\n\n\n\n\n\n
<\/th>\nLoan duration<\/th>\nLoan amount approved for the Market, \u20ac<\/th>\nLoan amount approved for the Market, %<\/th>\nFunded amount, \u20ac<\/th>\nFunded amount, %<\/th>\n

<\/tr>\n

<\/td>\n12 months<\/strong><\/td>\n1,300,140 \u20ac<\/td>\n4.3%<\/span><\/td>\n1,147,883 \u20ac<\/span><\/td>\n7.0%<\/span><\/td>\n<\/tr>\n

<\/p>\n

<\/td>\n24 months<\/strong><\/td>\n4,225,880 \u20ac<\/span><\/td>\n13.8%<\/span><\/td>\n3,084,597 \u20ac<\/span><\/td>\n18.9%<\/span><\/td>\n<\/tr>\n

<\/p>\n

<\/td>\n36 months<\/strong><\/td>\n5,721,963 \u20ac<\/span><\/td>\n18.8%<\/span><\/td>\n3,027,738 \u20ac<\/span><\/td>\n18.6%<\/span><\/td>\n<\/tr>\n

<\/p>\n

<\/td>\n48 months<\/strong><\/td>\n4,967,983 \u20ac<\/span><\/td>\n16.3%<\/span><\/td>\n2,560,050 \u20ac<\/span><\/td>\n15.7%<\/span><\/td>\n<\/tr>\n
<\/td>\n60 months<\/strong><\/td>\n14,300,592 \u20ac<\/span><\/td>\n46.9%<\/span><\/td>\n6,501,420 \u20ac<\/span><\/td>\n39.8%<\/span><\/td>\n<\/tr>\n

<\/tbody>\n<\/table>\n<\/div>\n

Timeframe: January 1, 2014 to October 14, 2014<\/em><\/p>\n

As one can see from the table above, given the nature of loan demand there are\u00a0plenty of opportunities for investors to invest into the loans with duration of over 36 months<\/strong>. Therefore, if longer duration loans provide sufficient returns, this might be one of the largest current opportunities overlooked by some of the investors. Let’s take a look at how longer duration loans performed so far:<\/p>\n

\n\n\n\n\n\n\n\n\n
<\/th>\n<\/th>\nWeighted interest rate<\/th>\nDefault rateof seasoned loans<\/th>\nRecoveryrate *<\/th>\nEstimatednet return<\/th>\n

<\/tr>\n

<\/td>\n12 months<\/strong><\/td>\n28.2%<\/td>\n4.0%<\/span><\/td>\n27.0%<\/span><\/td>\n24.1%<\/span><\/td>\n<\/tr>\n

<\/p>\n

<\/td>\n24 months<\/strong><\/td>\n27.1%<\/span><\/td>\n6.6%<\/span><\/td>\n27.0%<\/span><\/td>\n20.5%<\/span><\/td>\n<\/tr>\n

<\/p>\n

<\/td>\n36 months<\/strong><\/td>\n27.4%<\/span><\/td>\n8.6%<\/span><\/td>\n27.0%<\/span><\/td>\n18.8%<\/span><\/td>\n<\/tr>\n

<\/p>\n

<\/td>\n48 months<\/strong><\/td>\n26.8%<\/span><\/td>\n8.4%<\/span><\/td>\n27.0%<\/span><\/td>\n18.4%<\/span><\/td>\n<\/tr>\n
<\/td>\n60 months<\/strong><\/td>\n27.2%<\/span><\/td>\n8.1%<\/span><\/td>\n27.0%<\/span><\/td>\n19.0%<\/span><\/td>\n<\/tr>\n

<\/tbody>\n<\/table>\n<\/div>\n

Timeframe: January 1, 2009 to October 14, 2014<\/em><\/p>\n

*The recovery rate is calculated based on the loans, which defaulted in 2013 and have had on average 12 months to recover.<\/em><\/p>\n

As can be seen from the summary table above, the loans with the duration of over 36 months provided the return in excess of 18%<\/strong> despite a slightly higher default rates! Therefore, we suggest to take a closer look at the longer duration loans that come to the marketplace and set up Portfolio Managers to exploit this opportunity<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a0In general, longer maturity of a loan is usually associated with higher risk; thus, some investors avoid investing into loans that have a duration of over 36 months. However, over 50% of the loans that came to Bondora marketplace this year had duration of over 36 months, so we decided to analyze if investors are […]<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[120],"tags":[],"class_list":["post-195113","post","type-post","status-publish","format-standard","hentry","category-stats-and-data"],"acf":[],"featured_image":null,"categories_names":["Stats & Data"],"category_name":"Stats & Data","_links":{"self":[{"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/posts\/195113","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/comments?post=195113"}],"version-history":[{"count":0,"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/posts\/195113\/revisions"}],"wp:attachment":[{"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/media?parent=195113"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/categories?post=195113"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/tags?post=195113"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}