EstateGuru tightens credit policy
EstateGuru has slashed the upper borrower limits on new loans, as part of a general upheaval of its credit policy.
The European peer-to-peer property lending platform has implemented a maximum credit exposure of €2m (£1.72m) for Latvia-based borrower groups, and €3m for other markets. Existing borrower groups have a maximum exposure limit of €4m, the platform confirmed.
“Exposure beyond this limit mandates the implementation of an exit strategy, with exceptions subject to approval by the risk committee,” EstateGuru added.
Read more: EstateGuru reports buoyant originations despite default concerns
The platform has also capped at five per cent the number of projects with a maximum probability of default, as per a recent Moody’s assessment.
EstateGuru has also decided to “no longer engage in large-scale development projects, ensuring a prudent and focused approach to project selection.” More updates on this decision are set to be published soon.
The platform has discontinued the provision of related party loans, and it has implemented a series of new guidelines on the use of collateral.
Read more: EstateGuru’s investors financed €44m of property projects in H1
“For new credit evaluations, the valuation of collateral must not be older than six months, allowing us to maintain an accurate assessment of project value,” EstateGuru stated.
“As part of our strategy to enhance loan security, privately owned collateral will no longer be accepted.”
The updates come after the property lender reported a “robust” performance in July across its key markets.
During the month of July, 92 loans worth €12.5m were successfully repaid by borrowers. Investors earned an average return of 8.9 per cent.
Read more: EstateGuru loans now rated by Moody’s