Mintos interest rates drop

Funnily enough, the drama of interest rates dropping has happened many many times. For example with Twino this was an issue multiple times – they dropped interest rates and investors walked, then they increased the rates again but didn’t increase it to previous levels, so after a bit of turbulence, the rates ended up being slightly lower, the business was happy that the price of money supply was lower and the investors felt like their complaints were listened to (were they?)

With Mintos, we’re currently going through the interest drop turbulence again (second if not third time? maybe even fourth?). Once again though there is a big amount of investors who are surprised at *how* on earth the interest rates can be dropped, and threatening to walk.

Of course some investors will walk (if they have better options to invest), a very large amount will however be willing to invest at lower rates (as you can see from current statistics that is the case with Mintos).

The answer to the question of how the rates can be dropped is easy – supply and demand – there is a lot of money and not that many loans, meaning even lower rate loans get picked up.

This means that even if the money supply dries up a bit and originators increase the interest rates a bit, then they’ll likely never be as high as they used to be before.

Those who have been investing with Mintos for a while remember that at the start it was easy to have *only* 14% loans in your portfolio, the move to 12% loans has been gradual, and 11% loans have been tested for a while now (in mogo’s case).

Currently the primary market is at about 10-11% (and secondary market is cleared of 12%+ loans) and while the loans are moving slowly, then they are moving – the mogo buybacks have left investors with a lot of cash and the refer-a-friend campaign combined with the activate-automatic-strategy cashback campaign seem to be helping the cash flow.

So as is, investors have three options:

  1. Transfer money out and invest somewhere else (where?)
  2. Yield and invest the money into lower rate loans (to prevent cash drag)
  3. Wait and hope the interest rates bounce back (which they definitely might)

I’m currently a mix of 2-3. I am reinvesting some of the money, mostly picking up discount loans on the secondary market, and some 11,5-12% loans if I seem them on the primary market. I have been lucky though and not had that many mogo loans bought back so far, so I might have enough money locked in until the interest rates bounce back (I might have just jinxed myself and be hit with the next round of buybacks).

All in all – not much new, interest rates get tested all the time in P2P investing, been a while since it has happened on Mintos though but this is something that’s been talked about a long time – there is a serious push for interest rates to be lower (money supply from investors, longer histories for originators), and every now and then something like this is to be expected.

Mintos portfolio 2,5 years

Since Mintos has once again opened up their refer-a-friend and more people are looking for info on Mintos experiences, then I thought I’d do an update on my Mintos portfolio. For the first two years Mintos was mostly a small part of my P2P investments. Solid, but there were other alternatives I preferred (Omaraha at the time).

As time went on, Omaraha became less attractive due to lower returns and Mintos much more interesting due to cashback being offered. Since I sold my rental apartment and needed an option to invest the money short term, then for the last 6 months Mintos has been the biggest part of my portfolio.

This is the chart of my interest returns across two years – you can clearly see the *bump* from when I added in the money from the sales of the apartment and when I started to trade more actively on the secondary market (cashback being offered also offered bigger volumes for the secondary market).

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This as stated is interest returns – interest + late fees. This chart does not show cashback returns, which aren’t really repeatable at this point – since no campaigns are running, but cashback has effectively helped this year’s Mintos returns hover at about a 20% return. Cashback rewards + secondary market profits together are almost as big combined as all of my interest returns.

Overall, I’d say Mintos has definitely surprised me in a positive way when it comes to their growth rate and the pace at which they add loan originators. While I can’t keep my portfolio at this level for much longer since I need to cash out from some investments, but I feel comfortable having a significant amount of money invested with them.

Overall the only small issues I have with them are 1) it’s still somewhat slow to deposit money (some hassle with them switching providers as well), 2) maybe sometimes slow on updates (such as Eurocent case) and 3) somewhat difficult to assess originators for an investor (I only invest in a handful of the 40) and 4) at times customer service struggles with more complex questions. Most of these are fixable issues though.

Other than that, they’re more transparent than most P2P portals, sharing relevant info (yearly report) which should interest all investors, and as they are profitable I feel that a lot of risks are mitigated by that. No big issues so far over the 2,5 years I’ve invested with them.

 

 

Mintos cashback vol 3

Well, 2018 has started well – by mid-march I will have achieved the cashflow returns that took me all of 2017 to reach. Goes to show that sometimes having a bit of luck and cash at the correct time happens completely accidentally.

My biggest portfolio move this year was selling the small 12m2 rental apartment I had in Tallinn. While it was offering good rental returns, then in the long run it wasn’t in a very good house and 16m2 apartments have slowly started to gain popularity. Also, the prices of 12m2 apartments have reached ridiculous heights and since I needed to cash out something from my portfolio since I bought a new home which is being built, and I have to have cash available for various expenses in late autumn.

This deal however ended up being surprisingly well timed because I was able to drop most of the money from the sale into Mintos’s cashback program, which over the course of the last month has created some nice returns

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Of course the campaign has been very popular – there are days when there are no 60+mo loans and days when even the supply for 48mo+ loans has run out, but checking every now and then allows you to pick between countries and loan lengths to boost your portfolio. Since I’ve been investing mostly into Mogo loans anyway then I didn’t really feel much increased risk from temporarily increasing my exposure to them.

While this is a short term boost to investments (since when the cashback ends I will slowly have to start withdrawing money from the repayments), then it’s safe to say that Mintos has helped me boost my returns for the year significantly. Those who still have some cash laying around, then the campaign lasts for another 10 days (until March 16).

Mintos cashback vol 2

A bit more than a week after last Mintos cashback bonuses were paid out, another cashback program (actually two of them) was announced. Since I’ve seen some investors seem confused about the value of such a program, I thought I’d discuss it a bit. So, why offer a cashback?

  1. The obvious – bring in more money

As I predicted in my last post, the cashback pushed people to deposit more money, Mintos finished December with 46,9 million euros worth loans financed. This means more money for Mintos instantly (since they earn money based on the volume of loans financed), and a bigger growth push for them (since people who deposit money will not withdraw it instantly after the program is over).

2. The less obvious – encouraging long term commitment

I personally know a lot of people who invest in Mintos but only choose short term loans since long term loans seem too scary. What better to help people overcome mental hurdles such as this (taking on more long term risk) than extra money? Once people have dared to invest into longer term loans once, then once they have them in the portfolio it’s easier to add more long term loans (If you’ve already taken in 60mo+ loans then some more 12+ month loans seem less scary than having to “jump” from 1-3 month loans).

3. The practical – the money remains in the portal for a bit at least

Once you’ve invested into long term loans you can’t just instantly jump out again. Either the loan has to finish (take a long time), it has to get bought back for some reason (unpredictable) or you have to sell it on the secondary market. To sell on the secondary market someone else has to buy it – meaning other investors are likely to bring in more money. Or, if you’re in a hurry to get out then you’re likely to sell at a discount, and everyone is happy (other investor gets investments cheap). You can already see people selling BBG loans at a discount after having cashed in their discount.

4. The logistical – easier to manage

If an loan company (or Mintos) wants to increase amount of money from investors then logically you would have to increase interest. For long term loans a slight increase in interest is problematic since for a long term loan that comes to a large amount of money. If you list loans with the same interest rate as before, but offering a cashback it’s easier to manage (get to predict volume) and investors are less frustrated if loans get bought back later. It’s also more instant – increased interest rates will not motivate people to make deposits as quickly as a time-limited cashback offer.


 

Overall, since I’ve been investing into mogo loans for most of my Mintos career then for me the buyback is a nice bonus to have. I even sold some older loans at a bit of a discount to benefit from the cashback (I was interested to see that people were actually buying!). Some people are probably still a bit too scared to take in such long term loans, but, well, more left for those who pick them.

Mintos cashback program

It seems like Mintos is growing at such a rate that they need more investors’ money and therefore they are offering for the month of December a cashback program for investors willing to invest into long term loans via the primary market.

As someone whose portfolio in Mintos mostly consisted of long term loans (mostly mogo) anyways, then this is not a particular hardship to take part in – the cashback offers 2-5% cashback depending on the length of loans you are willing to put your money into.

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You can already see the effect this promotion is having by the fact that a) the primary market is pretty empty if you go looking for 60+month loans and looking at the stats for the whole month then half way through the month, Mintos seems to be on track of 45-50 million euros worth of loans being funded. Essentially they are reaching a point where through Mintos as much money is invested as through most other Baltic P2P portals, so super impressive for them!

Looking at the amount of money invested, and assuming maybe half of it would be invested into loans which qualify for the program (since there’s plenty of people who still wish to have only short term loans) the expense for the cashback I would assume, would run somewhere into the range of a couple of hundred thousand to half a million euros to be paid out to the investors.

I’ve also added a bit of extra money to Mintos this month, and will probably add another top-off to benefit from the cashback offer. There are a lot of interesting aspects to this offer, I assume at least some investors will be selling the loans they invested into on the secondary market once the program is over, so I’d expect it would be reasonable to stock up some cash to pick up bbg loans which are on sale on the secondary market at the start of January.

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For my portfolio it’s a nice boost to have, probably in the range of 50-100 euros max depending how much I deposit extra, but a nice Christmas present overall. The cashback gets paid out within a week as well, so if you invest now, then you’ll have time to reinvest the cashback amount as well after it’s deposited.

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