Good afternoon Investors,
Recently, I was reviewing loan performance of the first two quarters of this year and looking back in comparison with 2021. As investors with our company, this data directly reflects the private money industry in California due to the volume and diversity of loans that we cover. While we cannot clearly predict where this market is heading – we can hope to gain some perspective by examining where it has been and currently is at. Let’s face it, if we all had a scrying glass with a capability to see the future there wouldn’t be risk involved in investments – wouldn’t that be nice? So, here’s the data.
2021 Summary Review:
2021 was a big year at Sun Pacific Mortgage. With your help, we funded over $117 million in loans. The average loan size was $458,000 with a median size of $353,500. The average interest rate was 9.99%, and the median was 10.5%.
Here is a chart describing the median figures:
You may notice that May 2021 is unusually low with a median of $225,000, this is reflective of a lack of Owner-Occupied Purchases and a high volume of Business Purpose loans. Inversely August had a high quantity of Owner-Occupied Purchases and Refinances being requested by strong borrowers.
2022, 1st & 2nd Quarters and beyond:
1st Quarter –
- Loan Volume: $33 million
- Average loan size: $474,915
- Average Interest Rate: 9.63%
- Median Loan Size: $379,000
- Median Interest Rate: 10%
2nd Quarter –
- Loan Volume: $48 million
- Average loan size: $532,443
- Average Interest Rate: 9.68%
- Median Loan Size: $365,000
- Median Interest Rate: 10%
2022 is trending to be even better than 2021 in terms of quality and quantity of loans being offered. Right now, we are set to fund a 30% increase in loan volume by the end of the year. I think something notable is that with interest rate changes, Federal Rate Hikes, and shifts in this elastic and changing market, we as private lenders tend to see better loans when the stakes are raised. Take a look at the chart below:
What we can see are shifts in the market from 2021 to 2022. May was a large month for loan volume ($18 million) but yielded smaller sized loans with strong borrowers. May was also the turning point in the market where we saw a frenzy with media attention over rate hikes.
July might show a shift in the median loan size from 2021 to 2022, but matched trends and quantity in volume for the last 5 years. It should also be noted that with the changing market we raised our rates in June to no substantial effect. 2022 so far has a high volume of quality borrowers.
It will be interesting to see how the rest of the year plays out and I would be interest in hearing your thoughts. If you haven’t had a chance to answer our recent survey, please follow this link and provide us with brief data that will help us bring better TD offerings to you.