New Silver June 2022 Update

Real World Assets Pools
,
1

Dear Community,

Since the poll passed, we have been working hard on all fronts as we prepare to ask the MakerDAO community to consider a debt ceiling increase. We hope to put this proposal forward in the next month.

Here is a summary of the past month. As the Federal Reserve increased rates to fight inflation, the overall economy is cooling. While the single family housing inventory in the US remains historically low, there have been some increases in active listings. Conversely, price is still appreciating and homes are being bought up quickly. We are fairly well insulated from the consumer real estate market, but its always nice to see that consumer mortgage rates have dropped last week. We expect to see a gradual slowdown in consumer activity to a more “normalized” level by historical measures. Our base case for asset values is that pricing will stabilize towards the end 2022 and into 2023 and remain in range.

We are seeing a lot of loan applications come in, and loans are paying off as expected (though in a few cases, we granted extensions due to various delays, but all within norms). Since we have used the majority of the debt available to us through Maker, we have had to sell newly originated loans to other partners. Rates have gone up across the board, and buy rates from partners increased as well, thus causing us to increase interest rates. We believe, with an increased DC, we should be able to bring interest rates down to slightly below market in order to attract the most qualified borrowers/projects.

Here is a real estate market snapshot from realtor.com:

  • The national inventory of active listings increased by 18.7% over last year, while the total inventory of unsold homes, including pending listings, still declined by 1.4% due to a decline in pending inventory.
  • The inventory of active listings was down 34.1% compared to June 2020 in the early days of the COVID-19 pandemic, and down 53.2% compared to June 2019. In other words, there are a little less than two-thirds the number of homes available compared to June 2020, and less than half compared to June 2019.
  • More new listings entered the market in June compared to last year, though slightly down from May new listing growth.
    • Newly listed homes were up 4.5% nationally compared to a year ago, and up 3.1% for large metros over the past year.
    • Sellers listed at roughly the same rate as 2017 to 2019, prior to the pandemic, up slightly by 1.0%.
  • Housing remains expensive and fast-paced with the median asking price at a new high while time on market is up just one day from last month’s record low.
    • The June national median listing price for active listings was $450,000, up 16.9% compared to last year and up 31.4% compared to June 2020.
    • Nationally, the typical home spent 32 days on the market in June, down 4 days from the same time last year and down 37 days from June 2020.

Loan Originations in Tinlake
based on finance date

New Loans:14
New Loan USD Volume: $3.2mm
Average Originated Interest Rate: 9.1%
Average Tinlake Finance Fee: 6.45%
Average Loan Amount: DAI 234,734
Average Loan to Value: 71%
Average FICO score: 707
Average Term: 6 months
Loans Paid Back: 16
Current MakerDAO Debt Ceiling: $20mm with about $18.1mm used

Portfolio Analytics

Main_2022-07-12T20_46_44
Main_2022-07-12T20_46_441968Ă—1240 130 KB

Loan Performance

90+ day late: 0
Forbearance: 0
Foreclosure: 0

6 Likes
2

What do you mean by “Average Tinlake Finance Fee” ?

3

@ItsJake The Average Tinlake financing fee is the interest rate for borrowed funds from the pool. @prankstr25 can possibly go deeper.

Rate can be found on the Asset page of the pool: Assets: New Silver Series 2 | Tinlake | Centrifuge

1 Like
4

More color from @prankstr25 would be awesome!

Who does the fee go to? How does it effect the underwriting? Who pays it?

5

@ItsJake the fee goes to the pool Drop and Tin holders, it is the interest for borrowing.

1 Like
6

Correct, the finance fee is the coupon paid to investors on Tinlake, Drop gets paid a fixed coupon first, and the remainder is paid to Tin.

2 Likes
7

Where does the 6.45% come from? Currently, DROP is at 4.17% and TIN is at 23.19%. So the vast majority of investors are invested in DROP with only a few taking the risk on TIN? How do you account for the variable fee in your underwriting?

8

6.45% is the average finance fee for the month’s loans on Tinlake, the finance fee is based on a pre-set risk formula, and each asset is financed at a rate based on this pre-computed percentage. This finance fee is not specifically for Drop or Tin, this is the total coupon that goes to both Drop and Tin, whereby each class gets paid based on my earlier description. There might be some more info on this in the docs here.

1 Like