HNW Lending seeks better quality loans after second most profitable year
HNW Lending has become more prudent over the last year in its loan selection, its chief executive has said, at a time when interest rate rises are reducing demand for higher-risk investment opportunities.
Ben Shaw said the asset-backed peer-to-peer lending platform is now more picky about which loans it is prepared to underwrite. This is partly driven by delays in the courts, with the firm wanting to avoid offering loans that might default.
“Pre-Covid courts worked very well. It took you between a couple of months up to a year to repossess a property, but nowadays it’s much longer,” he told Peer2Peer Finance News.
“So for the chances of paying lenders their interest in full, if a borrower stops paying, you need to wait several years, and we would rather not get into a position where there might be a default.”
With the Bank of England increasing interest rates today to 2.25 per cent, it is important to find the right deals where the borrowers are prepared the right amount of interest, Shaw said, so that HNW Lending can offer lenders higher returns.
Read more: HNW Lending sees strong pipeline of loans after drop in lending this year
“There is quite a lot of money out in the lending space and it’s not so easy to get higher returns when you have other lenders doing stuff very cheaply,” he said.
Shaw revealed that a third of the loans currently on the platform are for repeat borrowers, meaning they are better quality as the borrowers have paid back their loans previously.
Shaw added that underlying profit for HNW Lending is substantially higher this year than the previous year. He added that 2022 was the second highest profit year for the company, although he declined to share an exact figure.
Read more: HNW Lending mulls open banking
According to abridged accounts for the year to 31 March published on Companies House, HNW Lending posted a profit of £71,122, down from £89,924, the previous year.
However, Shaw said this figure is shown after appropriations have been made, such as dividend payments. In fact, he said, the profit is much higher than what is shown on the accounts.
Read more: HNW Lending achieves record profit in 2021