As we’ve published in the blog previously, “How to invest in High Inflation and Low Economic Growth Periods,” the Euro area annual inflation has grown dramatically during 2022—expected to be 8.9% in July 2022, up from 8.6% in June, according to a flash estimate from Eurostat. Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in July (39.7%, compared with 42.0% in June), followed by food, alcohol & tobacco (9.8%, compared with 8.9% in June), non-energy industrial goods (4.5%, compared with 4.3% in June) and services (3.7%, compared with 3.4% in June). The main reasons for the current high inflation rates are money printing due to the global pandemic and the Russian invasion of Ukraine, which is still ongoing.
To address the issue of high inflation (and consequently, less absolute yield) for the benefit of our investors, we have decided to temporarily allow the Loan Originators on Income to list loans at higher rates. Income has historically capped the interest rate that Loan Originators can offer to investors at 12%, which we are now adjusting to 15% to reflect the recent changes in the economic environment.
The security features: Cashflow Buffer, and Buyback Obligation, will stay the same. Just now, you will be able to earn up to 15% p.a. Instead of the previous 12% p.a.
