Mintos drying up in mid-term secured loans?

The more people buy these loans, the more likely it will be that the situation will be permanent... I do not buy these loans. My money will be reinvested elsewhere.

I am in the same position as you all with my Auto Invest having failed to find any new opportunities. I have added new portfolios (low LTV short-term mortgages and some of the 10.5% personal loans).

The conclusion of many investors seems to be that short-maturity loans with buyback are the most attractive and auto loans are less attractive because we believe the buyback guarantee may not last years and/or we may need our money back sooner. So according to the Mintos statistics, car loans have become more expensive and personal loans are cheaper as the statistics page shows. The lines cross over earlier this year and personal loans are now the lowest they've ever been. That's the market working. It is not surprising that demand for 12% short-term loans with buyback exceeds supply. It's a great proposition and was, perhaps, too good to last.

The question to martins would be: are you looking for new lenders who may be in a position to offer 12% on loans of 3 months or less, with buyback? You now know that the demand is there from investors.

 

Whitbourne , we are constantly working on bringing new loan originators to our marketplace. A couple of days ago Lendo, offering short term personal loans with buyback guarantee, joined our marketplace. We expect to connect a few more loan originators in a very near future to further increase the loan supply so that investors can build a well diversified portfolios and thus reduce unsystematic risk.

General note on short-term versus longer-term loans. In many cases investing in longer-term loans can trump investing in short-term loans. The advantage comes from the fact that the money is invested throughout the whole term and investors don't have to bother with reinvesting. The effect of uninvested funds, i.e. cash drag can be significant when considering total return and is sometimes overlooked by investors. Additionally, by investing in longer-term loans investors can get exposure to other type of borrowers, e.g. the typical borrower of car loan or mortgage loan will be in many cases very much different from the borrower of payday loan. In that way investors can further diversify their portfolios. As a result, reduced cash drag and additional diversification might be superior to having short maturity, especially since there is a liquid secondary market available in case an investor needs an immediate liquidity (read an in-depth analysis of our secondary market in our recent blog post here blog.mintos.com/secondary-market-data/).