r00lish67
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Post by r00lish67 on Nov 21, 2017 18:45:27 GMT
On what seems a very very quiet day indeed for a P2P investor, I was virtually leafing through Ratesetter's website, here: www.ratesetter.com/invest/everyday-account/protectionFrom the pretty portfolio management charts about halfway down, it looks like RS are fairly substantially increasing their property development loan holdings. Notable figures for me were £81m lent in the current portfolio as a whole, but £37m of that in just the last 3 months. Does anyone have any further information as the sort of property loans they're taking on? I'm wondering if there's a link between the recent 'crossed rates loans' (producing amounts/rates such as £1.1m @ 7.0% on the 5 year market) and the need to fill large property tranches all at once, as opposed to being spread about by individuals varying timeframes needs. In short, are RS now competing more in the PBL/DFL space with other P2P platforms? Edit: Further info here www.ratesetter.com/borrow/property-development-loans. Up to £7.5m loans. And quite an interesting interview: www.ratesetter.com/blog/article/interview-neal-moy-head-of-property-financeI like this bit: "One thing that people don’t always realise is that we are very hands-on if projects don’t perform as they should. I tell the people in my team that if a development goes wrong, you’re going to have to live in the area until it’s resolved".
I somehow think some of the long running sagas we've seen on Lendy/FS would have been rather more quickly resolved with this rule  the prospect of a year or two in a tent on a vacant lot in Whitehaven would encourage me to progress matters. That said, the surrey house looks ok for a short term stay.. |
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Post by skint4achange on Nov 21, 2017 19:18:15 GMT
On the plus side, at least they have stayed true to word and not made any loans to other lending businesses!! 
P.s If they need a volunteer to look after the house in Surrey, however, you lot have to pay the electric bill for heating that pool!! 
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happy
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Post by happy on Nov 22, 2017 16:20:00 GMT
And with the typical funding cost at RS being substantially below what these types of loans are being funded for elsewhere this could put further downward pressure on property loans across the P2P market. Not necessarily great news for us investors
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invester
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Post by invester on Nov 22, 2017 22:35:26 GMT
From reading that, you would hope that Ratesetter are competing in a totally different market segment to the others - they would be up against the mainstream banks.
The others who are charging 20% or more are clearly for the market that can't get finance in this way.
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r00lish67
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Post by r00lish67 on Nov 23, 2017 9:56:16 GMT
From reading that, you would hope that Ratesetter are competing in a totally different market segment to the others - they would be up against the mainstream banks. The others who are charging 20% or more are clearly for the market that can't get finance in this way. I think their investor rates would be too high to compete with mainstream banks. RS were willing to offer a large chunk of cash to investors at 7% recently and regularly offer 5-6% in the various markets, and that then has to allow for the probably fairly large overheads they have, the provision fund, and an inexact link to when they actually require funding for the developments. If RS was a self-select platform, then they'd perhaps offer investors 7-10% p.a for each project a'la Assetz. They're also targeting a max 65% LTV, 1st charges only, with experienced developers only. So I think they're potentially taking on some of the higher grade deals that we've been used to seeing on other P2P platforms, leaving the likes of LY/MT/FS to scrap over the more niche and higher risk properties/borrowers. As I say, all just my speculation, but it would be interesting to know where exactly our RS money is going.
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Post by Badly Drawn Stickman on Nov 23, 2017 11:21:22 GMT
From reading that, you would hope that Ratesetter are competing in a totally different market segment to the others - they would be up against the mainstream banks. The others who are charging 20% or more are clearly for the market that can't get finance in this way. I think their investor rates would be too high to compete with mainstream banks. RS were willing to offer a large chunk of cash to investors at 7% recently and regularly offer 5-6% in the various markets, and that then has to allow for the probably fairly large overheads they have, the provision fund, and an inexact link to when they actually require funding for the developments. If RS was a self-select platform, then they'd perhaps offer investors 7-10% p.a for each project a'la Assetz. They're also targeting a max 65% LTV, 1st charges only, with experienced developers only. So I think they're potentially taking on some of the higher grade deals that we've been used to seeing on other P2P platforms, leaving the likes of LY/MT/FS to scrap over the more niche and higher risk properties/borrowers. As I say, all just my speculation, but it would be interesting to know where exactly our RS money is going. My Ratesetter 'experience' only started a couple of weeks ago, so I really don't have enough history with it to notice if anything has changed. I am mostly in 'play' mode with it at the moment, learning to read the signs of rate change. It is noticeable that 100k plus individual loan requests are not rare, that would suggest an element of small property to me. Having said that it can only be guesswork. In truth at this point I am more interested in being confident my money will come back, than where it goes to in its absence.
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coogaruk
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Post by coogaruk on Nov 23, 2017 15:09:12 GMT
In truth at this point I am more interested in being confident my money will come back, than where it goes to in its absence. Spoken like a true investor!
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keith
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Post by keith on Nov 24, 2017 18:50:42 GMT
I wonder what we mean by “stealing” here. If they are stealing loans that, for example, would have popped up on FS, is that a good thing, bad thing or merely systemic risk?
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Post by martinde21 on Nov 25, 2017 9:32:52 GMT
Hey
I am interested in four things with RateSetter:
1) Interest rates 2) Consistency of my payments 3) Cash drag on the queues 4) Provision Fund.
Currently I am bemused by 1, delighted with 2, happy with 3, and watching 4.
To be honest, I'm not fussed if they are diversifying into more property loans and would see this as good from a risk management point of view.
Hope this helps...
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snowmobile
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Post by snowmobile on Nov 25, 2017 10:34:05 GMT
From reading that, you would hope that Ratesetter are competing in a totally different market segment to the others - they would be up against the mainstream banks. The others who are charging 20% or more are clearly for the market that can't get finance in this way. I think their investor rates would be too high to compete with mainstream banks. RS were willing to offer a large chunk of cash to investors at 7% recently and regularly offer 5-6% in the various markets, and that then has to allow for the probably fairly large overheads they have, the provision fund, and an inexact link to when they actually require funding for the developments. If RS was a self-select platform, then they'd perhaps offer investors 7-10% p.a for each project a'la Assetz. They're also targeting a max 65% LTV, 1st charges only, with experienced developers only. So I think they're potentially taking on some of the higher grade deals that we've been used to seeing on other P2P platforms, leaving the likes of LY/MT/FS to scrap over the more niche and higher risk properties/borrowers. As I say, all just my speculation, but it would be interesting to know where exactly our RS money is going. RS quote the typical borrower APR for property development loans as 5-9% (Source www.ratesetter.com/invest/everyday-account/protection data table under 'Who do Ratesetter investors lend to?') That does seem quite low in terms of what other P2P platforms would charge, even the lower rate ones. They're either competing directly against the banks or undercutting the P2P platforms to win the business. Given that they have been offering lenders 5-7% recently, it doesn't seem to offer them much in the way of margin. Is it sustainable I wonder? I've also noticed that the rolling, 1 year and 5 year lender rates have almost converged as one, according to the latest rate trends graph www.ratesetter.com/aboutus/statistics. I haven't seen that happen before. RS are certainly changing, for the better or not remains to be seen.
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r00lish67
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Post by r00lish67 on Nov 25, 2017 10:44:39 GMT
I think their investor rates would be too high to compete with mainstream banks. RS were willing to offer a large chunk of cash to investors at 7% recently and regularly offer 5-6% in the various markets, and that then has to allow for the probably fairly large overheads they have, the provision fund, and an inexact link to when they actually require funding for the developments. If RS was a self-select platform, then they'd perhaps offer investors 7-10% p.a for each project a'la Assetz. They're also targeting a max 65% LTV, 1st charges only, with experienced developers only. So I think they're potentially taking on some of the higher grade deals that we've been used to seeing on other P2P platforms, leaving the likes of LY/MT/FS to scrap over the more niche and higher risk properties/borrowers. As I say, all just my speculation, but it would be interesting to know where exactly our RS money is going. RS quote the typical borrower APR for property development loans as 5-9% (Source www.ratesetter.com/invest/everyday-account/protection data table under 'Who do Ratesetter investors lend to?') That does seem quite low in terms of what other P2P platforms would charge, even the lower rate ones. They're either competing directly against the banks or undercutting the P2P platforms to win the business. Given that they have been offering lenders 5-7% recently, it doesn't seem to offer them much in the way of margin. Is it sustainable I wonder? I've also noticed that the rolling, 1 year and 5 year lender rates have almost converged as one, according to the latest rate trends graph www.ratesetter.com/aboutus/statistics. I haven't seen that happen before. RS are certainly changing, for the better or not remains to be seen. Good spot, I hadn't seen that. I guess you and invester are right then, as the bunch of rogues sub-prime borrowers we lend to via other platforms would never be able to attract rates that low. Would agree that leaves a question mark over margins then, although the same table shows they charge some individuals borrowers up to 49.9% APR - gulp!
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Post by dualinvestor on Nov 25, 2017 10:46:14 GMT
I would hope Ratesetter is more of a “mezzanine” lender, i.e. loans that aren’t quite good enough for banks but much more creditworthy than the likes of L/MT/FS. They appear much more “hands on” with 65% LTV, 1-2 year loans with a dedicated credit manager. We can but hope they have it right.
£37million in the last 3 months in chunks of £500k minimum would certainly explain some of the anomalies in the markets.
As for stealing the clothes of the property platforms, I don’t think so more like exploiting another market. However if I am wrong time to wave goodbye to them at c.6%.
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snowmobile
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Post by snowmobile on Nov 25, 2017 11:12:04 GMT
Another issue relevant to the marked increase in property development lending is that RS may be motivated to do so in order to protect the provision fund. This was pointed out by keith in this thread discussing the recent changes to how the provision fund deals with loans to property developers. www.ratesetter.com/blog/article/changing-how-the-provision-fund-deals-with-loans-to-property-developersI was particularly concerned to read, under Q&A: I'm not convinced the rates on offer compensate for this additional risk, even if backed by the provision fund. Personally I'd always considered my modest RS investments as offering some diversification away from property within my P2P portfolio. However it appears that is no longer the case. |
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adrian77
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Post by adrian77 on Nov 26, 2017 16:17:07 GMT
All this is very interesting and I wonder where all this will end-up if (when) there is a property crash. Clearly this P2P lending is a new phenomenon and nobody can tell the future although teething problems can be expected. I guess the main question is how secure are these loans and will 100% recovery or pretty close be attainable incase of default - I have no idea.
Also I wonder or even worry p2p lending in general is bypassing caution shown by the banks (well they learnt that one the hard way!) and could lead to effect a repeat of the sub-prime mortgage property crash which as a small developer cost me over £100K.
If RS are in competion with the banks and can under-cut them with low LTV on realistic prospects then no problem but some of the loans with e.g. Funding Secure really, really worry me.
Funding Circle have (or so they say) pulled out of the property market as they hit several mega problems with it and are now able to sweep most of their bad loans under the carpet by bleeding refinancing loans into their general fund. I suspect they did this because a switched-on accountant from one of their investors told them to quit this market as the writing was on the wall for them.
I like RS but all my money is 30 day rolling so if the p2p market does hit problems then hopefully I can still get all my money out within the month.
I guess,as with all investments, it is a question of market research allied with caution unless you live in the fast lane....be interesting to see where this market is in a couple of years time.
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keith
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Post by keith on Dec 5, 2017 20:50:49 GMT
I share your concerns to which I will add one more.
If there is a crash in the property market the LTVs are obviously threatened. Put aside for the moment the argument that said LTVs are mythical and we are left with the problem of extracting cash back from the properties. Given the PTP industry - maybe that’s unfair - given some platforms in the PTP industry seem to have extreme difficulty with sorting out the current level of issues then there must be some capacity constraint in dealing with a wide scale default.
I am mitigating this risk by doubling my gym sessions, OD-ing on steroids and hiring myself out as a heavy to a debt collection firm.
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the prospect of a year or two in a tent on a vacant lot in Whitehaven would encourage me to progress matters. That said, the surrey house looks ok for a short term stay..
