We’re now well into the year, and we’ve had some interesting things unfolding with interest rates. We’ve also concluded our review on the Personal Loan portfolio.
Let’s get straight into it.
The Personal Loan chapter is closing
Personal Loans have had a solid run – but the time has come for us to wind them down.
We’ve now stopped accepting new Personal Loan applications, and from 2 March 2026, there will be no new investments created in the Personal Loan investment class. From here, the existing portfolio will simply run down naturally as borrowers repay their loans.
Meanwhile, nothing changes for our Home Loan and Construction Loan investment classes, or the Monthly Income Fund (in fact, we’re leaning further into this).
As part of the run-down of Personal Loans, we’ve updated our investor terms and platform agreements. All investors will be prompted to accept these next time you log in to the Squirrel app.
Key updates include:
- Removing references to Personal Loans for new investments
- Enabling Squirrel to act as the sole market maker (i.e. buyer) of Personal Loan investments on the Secondary Market
- Allowing Squirrel to cancel investment orders where needed (note: this will only ever happen in exceptional circumstances, such as the winding down of an investment class), and
- Allowing any residual funds held in a Reserve Fund (where the associated Term Investment class has been placed into run-off) to be re-distributed to one or more other Reserve Funds—but only at the point that all loans covered by that Reserve Fund have been repaid
Importantly, the Personal Loan Reserve Fund will remain in place while the portfolio runs down.
If you want further details, have a read of our FAQs.
Interest rates – what’s actually happening?
Longer-term interest rates had started to creep up in advance of our first Official Cash Rate (OCR) announcement of the year, on 18 February.
That was a reflection of rising longer-term wholesale rates, as the market—following a higher-than-expected inflation number for the December 2025 quarter—had started to anticipate that our first OCR increase would be brought forward to September.
In the end, the tone of the Reserve Bank’s statement was pretty doveish. It held the OCR at 2.25% and was careful to stress that (at this stage) it plans on keeping rates flat through most of this year.
That’s brought the markets back into line, with longer term wholesale rates tracking downwards again since the announcement. Through all this movement, banks term investment rates have remained much the same.
What all this interest rate volatility means for Squirrel
Not a lot at the moment. We price off short-term wholesale rates and offer variable returns, meaning we’re less exposed to those longer-term swings.
My expectation is that short-term rates should stay relatively steady for the next nine months. So you can expect our current interest rate settings to stay roughly where they are for now. All of this subject to the shenanigans of a highly volatile world!
Term investment wait times: finally improving
Good news here. We’ve got a decent bunch of new loans settling over the next six weeks, helping to bring queue sizes down and reduce wait times.
Based on what’s in the pipeline, I expect further improvement over the coming weeks.
Loan portfolio health
We’re seeing progress – some of the longer-running over-term loans are resolving, and the watch list is shrinking.
We’re not quite through the tail end of this property cycle yet, but we continue to actively manage the portfolio and take action when needed. Reserve funds continue to grow steadily and are there if required.
Questions, comments, ideas?
If there’s something we’re doing well, or something we could do better, I’m always keen to hear it.
And if there’s a topic you’d like covered in the March webinar, get in touch to let me know.