Branch Raises Funding To Launch In Uganda, Tanzania

Category: Short-term Lending
Published: Monday, 04 January 2016
Written by Super User

Branch is set to raise a massive funding round to launch in Uganda and Tanzania as well as bolster its local operations in Kenya soon.

Matt Flannery, the co-founder and ex-CEO, micro-lending startup speaking at his Nairobi office said, "Our mission is to provide world-class financial services to the mobile generation, practically speaking that means we want to be a bank branch in your pocket, even more practical we have an Android app you install on your smartphone."

Branch at the moment has about 70,000 downloads and almost 30,000 people borrowing an average of $40 each and the users are moving up the ladder pretty fast.

"We are launching in Uganda and Tanzania in January. I'll soon announce a big fundraising round. I can't announce it here but it will be one of biggest fundraising rounds ever in Kenya.

"You got to raise more money to be a lender. I'm just closing a lot more funders in the next couple of weeks and will announce it. It's exciting changing the mindset of Silicon Valley investors. It's exciting to see people start to invest in businesses in Africa," Flannery said.

If its huge, it'll beat InVenture's $10million series A it announced in September. The raise will help Branch to become a long-term lender it wants to be and not a short-term micro-credit lender like some of the players in the market.

Flannery adds that Branch is just starting and will offer more financial services soon. Branch is looking to hire great engineering talent in Nairobi to join its team.

"We will in future offer savings, money transfer like PayPal among other financial services but we are brand new and don't have a mobile licence yet so we just started with credit."

Branch works simply. Users download the Branch App., and then provide their personal details to sign up. Then one invites friends to join so they form a network of trusted friends within Branch. The network increases one's ability to access quick, fast loans. Loans are sent to the recipient's M-PESA within 24 hours after approval. Once a borrower pays back the principle plus the fees, they can start to borrow and repay becoming eligible for larger, cheaper loans into the future.

The firm charges around 6 per cent to 12 per cent on each loan it issues and the more someone borrows the cheaper their loans become because it's unsecured but based on machine learning algorithms which query Facebook connections and a user's M-PESA transactions before qualifying them for loans. The loans are from two weeks to six months.

Branch uses the trust networks from its user's digital connections as credit scores so the friends one has matters. Branch said it aims to bridge the financing gap to increase banking options and flexibility to allow its customers to pursue their dreams. Branch will compete players such as Mkopo Rahisi, Kenya's CBA and Safaricom's M-SHWARI and KCB and Safaricom's KCB-MPESA. The advantage it has over others is that it's going into long-term lending and not short-term lending as its competitors.

Earlier, Branch raised $1.4 million in seed funding from Formation 8 and the Khosla Impact Fund, to start operations in Kenya and bring credit to millions of smartphone users in emerging markets. This new raise will help it consolidate its hold on the market but other players can't be disqualified yet.

Managing your holiday debt in the New Year

Category: Short-term Lending
Published: Monday, 04 January 2016
Written by Super User

It isnt just the excess clutter that comes with over shopping during the holidays we need to worry about. Going overboard on gifts can land you in a chunk of debt before the new year.

This year, Americans spend more on Christmas than they ever have.

Check out what you did spend this holiday season, see if it is what you thought you spent. Now youve got a bench mark to compare and budget for next years holiday season, said Todd Buchanan, with Buchanan Capital.

Credit card debt notoriously has some of the highest interest rates, which can set you up for even more problems in the new year and last week the fed announced it will raise the short-term lending rate. In the next year, the rate will be raised by over a percent if the economic conditions support it, which means Americans should prepare for even higher rates on their debt.

I think the bottom line is be aware of it, dont ignore it. When it comes to your debt management, be prepared to see higher interest rates, not only on new loans that you might take out but definitely the variable rate loans that you have outstanding, said Buchanan.

Buchanan says start making your plans for the new year and stick to them. Only one third of Americans met the finance management goals they set for themselves last year.

Buchanan also says there are certain types of debt you dont have to worry about as much, good debt as he calls it. That includes things like real estate, especially in a place like Billings, where property value appreciates at a good rate. Another type of good debt is student loans, because education ultimately increases your earning potential.

Buchanan says when it comes to paying off your debt, both good and bad, go for the ones with the highest interest rate first, which usually is credit cards. Another good place to start is with paying off the smallest balance to free up your cash flow.

PBOC Scales Back Cash Injections Before Banks' Liquidity Checks

Category: Short-term Lending
Published: Monday, 04 January 2016
Written by Super User

The People's Bank of China scaled back the use of a short-term lending tool in its open-market operations, draining cash from the financial system as banks prepare to meet year-end liquiditychecks by regulators.

The monetary authority auctioned 10 billion yuan ($1.5 billion) of seven-day reverse-repurchase agreements at an interest rate of 2.25 percent, less than the 30 billion offered a week ago. Banks' demand for funds typically rises in the run-up to deadlines for them to meet regulatory requirements.

"It's surprising to see a net withdrawal today in open-market operations," said Li Liuyang, chief financial market analyst at Bank of Tokyo-Mitsubishi UFJ (China) Ltd. in Shanghai. "It either means there is too much liquidity in the interbank market, so there's not much demand for reverse repos, or the central bank is preparing to use other tools, including reserve-requirement-ratio cuts, to meet demand for funds."

30-year Mortgage Rate Over 4%; Expected at 4.7% by 4Q 2016: Freddie Mac

Category: Short-term Lending
Published: Sunday, 03 January 2016
Written by Super User

The average rate for a 30-year fixed mortgage was 4.01 percent this week, up from from 3.96 percent last week, Freddie Mac said in its weekly update Thursday. The average 15-year rate climbed to 3.24 percent from 3.22 percent.

The 30-year fixed rate had not been over 4 percent since July. Freddie Mac is projecting that the 30-year rate will average 4.7 percent a year from now.

In the final week of 2015, Treasury yields jumped reacting in part to strong consumer confidence in December, Sean Becketti, chief economist, Freddie Mac. In response, the 30-year mortgage rate rose 5 basis points to 4.01 percent, ending a 5-month span below 4 percent. After averaging 3.9 percent in the fourth quarter of 2015, we expect the 30-year mortgage rate to average 4.7 percent for the fourth quarter of 2016.

Fed policy makers earlier this month raised the short-term, benchmark federal funds rate for the first time since 2006, lifting it from a range of "0 to 0.25 percent" to ".25 to .50 percent." The move is slight, but policy makers separately project a rate of 1.375 percent by the end of 2016, potentially indicating four quarter-point increases over the next year. The short-term lending rate has a ripple effect on most lending rates, but market factors are also at play. Borrowers with excellent credit will feel less of an impact next year.

Here is Freddie Macs rundown of mortgage rates for the week:

30-year fixed-rate mortgage (FRM) averaged 4.01 percent with an average 0.6 point for the week ending December 31, 2015, up from last week when it averaged 3.96 percent. A year ago at this time, the 30-year FRM averaged 3.87 percent.

15-year FRM this week averaged 3.24 percent with an average 0.6 point, up from 3.22 percent last week. A year ago at this time, the 15-year FRM averaged 3.15 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.08 percent this week with an average 0.4 point, up from last week when it averaged 3.06 percent. A year ago, the 5-year ARM averaged 3.01 percent.

1-year Treasury-indexed ARM averaged 2.68 percent this week with an average 0.2 point, unchanged from last week. At this time last year, the 1-year ARM averaged 2.40 percent.