In general, it’s been a tough year for the property market. Here at Zagga though, we have our own unique niche, and we’ve been able to charge on despite a challenging property market. Here are some of the highlights:
- Less than 1 hour: Fastest time to fund a single loan
- 48 hours: Average time to fund a loan on the platform
- 104: Largest number of investors in any single loan
- 8: Average number of investors in any loan
- $500,000: Largest sum invested in a single loan by an individual investor
- 12: Number of times more than $250,000 was invested in a loan by a single investor
Rapid turnaround gives us the edge
For most of 2024, bank lending was sluggish. Hampered by high interest rates and a flat housing market, they only loosened the purse strings for the best and simplest loans. When it came to small-scale developments, bridging loans and less-than-simple purchases? The banks weren’t particularly interested. Bank processing on applications was also slow – typically two to three weeks for standard deals. We heard stories of banks sitting on applications for 10 days before even looking at them.
That presented plenty of opportunities for Zagga, because we can move fast. Our small and nimble team of credit analysts and administrators can assess each loan closely. We’ll jump in an Uber to inspect a property, check every detail, talk to the borrowers, and make a decision as fast as possible. From there, Zagga’s team will sort out the paperwork for a successful application, and get it listed on our platform. From woah to go, during 2024 loan applications could be uploaded onto our platform and funded within three business days of receipt in some cases.
Once a loan is listed, an email goes out to our investors, and they respond immediately. Our investors have been enormously supportive, and nearly every loan has been fully funded this year. Investors are quick to respond to new offers, with most funded within a few days of listing. The record this year was for a loan that was funded in less than 20 minutes and the average was 48 hours. The average loan size in 2024 was $1,084,257, with an average loan-to-value ratio (LVR) of 52%.
A rise in ‘vanilla’ residential lending
Previously, our loans have been dominated by development and construction projects. We still saw many of these projects in 2024, but we’d expect to see more in 2025. Instead, the interest rates and quick responses led to a rise in ‘vanilla’ lending this year: basic residential buying, bridging, equity releases and refinancing.
The refinancing was a real vote of confidence from borrowers, with a significant number of returning borrowers extending quality loans for another 12 months. With mid-year interest rates over 7%, the rate for Zagga’s borrowers wasn’t that much higher, and coupled with the rapid processing times, people came back to us rather than going to a main bank.
In the fourth quarter of the year, the official cash rate started falling, and term deposit rates dropped. As we approach 2025, term deposit rates are back to paying less than 5%, giving investors a renewed appetite for Zagga’s loans, which typically return between 8% and 10%.
This year, the average loan had 45.8 investors, and the loan with the highest involvement had 104 investors. There were 12 instances where individual investors put $250,000 or more into a single loan, and one instance where $500,000 was invested in a single loan.
We know that our investors would like to see more loans listed, and we share the sentiment. But it’s imperative that we maintain the quality of the loans – we’re not going to lower our standards just to increase the number of loans on the platform.
Secondary market proves a win-win for investors
Finally, it’s worth noting that our secondary market has been operating smoothly this year. There were around five instances where an investor needed to get their funds out of a loan, and we listed their portion of a loan on our website. We don’t notify investors via email of a secondary lending opportunity being listed, so it was great to see every secondary loan very quickly refinanced to other investors. It was a win-win situation as the original investor got their funds out, and new investors got into a loan with a proven track record for success.
Overall, 2024 has been a solid year for Zagga despite the tricky market conditions. We expect 2025 to be even more successful. Happy New Year!
