markdirac
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Post by markdirac on Jan 9, 2018 11:34:28 GMT
AC has a good reputation for low defaults and methodical recovery. But ... these are the (annualised) yields from my GBBA#1 account in recent months:
may 5.68%
jun 7.55%
jul 6.35%
aug 4.22%
sep 5.46%
oct 6.50%
nov 5.14%
dec 4.65%
I note that in December, 4.65 % points is a full 34% down from the target 7% points. Ben has diligently looked into this for me, and I am shocked to find that 34% of my GBBA account is non-performing.
20% of the shortfall is due to loans which are suspended, and have not been paying interest. And the remaining 14% is due to late payments.
I would not be too concerned at late payments, if it were the fact that late payments in December were matched by late payments from Nov being paid into Dec. But instead the late payments are accumulating, and there is a word different to "late" that I would use for such a situation.
This 34% figure is so very very different to the respectable default figures published on AC's website that I am quite concerned. Is this just bad luck regarding the loans which AC's algorithm has allocated to me, or has anyone else noticed this large shortfall in their GBBA income?
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SteveT
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Post by SteveT on Jan 9, 2018 11:53:00 GMT
What % of your GBBA is in #227? I'll hazard a guess that one's denting your Nov and Dec figures (and will do for some months to come). Given its size, most AC lenders will have their share of it!
ps. Strictly speaking, #227 is not (yet) "non-performing". It is now in a lender-agreed extension period where the interest is rolling up, rather than being paid monthly.
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markdirac
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Post by markdirac on Jan 9, 2018 12:05:58 GMT
Yes Steve you're spot on. But this is by no means the whole story - loan#227 accounts for only a small part of the 34% shortfall. And it is only a part of the 20% shortfall due to suspended loans. There are many many other loans contributing to this alarming shortfall.
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jonah
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Post by jonah on Jan 9, 2018 20:02:38 GMT
December was a bad month due to payments being delayed by borrowers or AC. As they seem to be catching up in January, I suspect you will get a higher than average return this month.
That said, there are several loans with long periods of accrual eg 327 or 501 which will generate a more spiked return. My total interest accrued is getting close to 2% of my capital.
One positive note, AC have said in a post on here, they are looking to move to repayment of missing payments before going through full recovery etc.
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DeafEater
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Post by DeafEater on Jan 9, 2018 22:06:28 GMT
It sounds bad but is still considerably better than my GEIA investment which should be bearing interest at a rate of 0.5654% per month but has been falling gradually for the past 4 months and in December only returned 0.22% of the capital as interest. This suggests about 61% of my GEIA is non-performing. I'm showing an impressive figure for accrued interest but given AC's cautious approach to using their provision fund, that's only likely to be of interest to my heirs' children.
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duck
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Post by duck on Jan 10, 2018 7:12:39 GMT
markdirac I don't know if it helps but at the end of Dec I looked at all my AC accounts and compared interest received with Nov. Dec was low across all my accounts. I achieved very little cash drag (below £5) and I wasn't buying/selling on the aftermarket (MILA). I've always noticed a 'month up', 'month down' return on my AC investments but I agree Dec was poor. Things have picked up in Jan and my interest return 1/3 of the way through the month is approaching the Dec level ... so plenty of time to exceed the disappointment of Dec. Wife's GBBA -43% My GBBA -44.2% My MILA -34.5% Business MILA -24%
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daveb4
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Post by daveb4 on Jan 10, 2018 18:00:38 GMT
Haven't checked but are we looking at trying to achieve APR here eg 7% over the year with interest accruing? Appreciate comments above apear to be just interest per month and probably still fall short of 7% if reinvested. Hopefully they do not include accrual as then we are seriously sort? Interested to know how many loans in total you are invested in?
Also another good example of where is the support from the Provision Fund?
The Provision Fund is designed to cover:
Payment delays of interest from a borrower where that sum arrives later than expected
Shortfalls in interest received from a borrower
Any possible capital losses if a loan defaults and the security when sold does not cover the loan balance remaining
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markdirac
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Post by markdirac on Jan 10, 2018 20:19:55 GMT
It sounds bad but is still considerably better than my GEIA investment which should be bearing interest at a rate of 0.5654% per month but has been falling gradually for the past 4 months and in December only returned 0.22% of the capital as interest. This suggests about 61% of my GEIA is non-performing. I'm showing an impressive figure for accrued interest but given AC's cautious approach to using their provision fund, that's only likely to be of interest to my heirs' children. If anyone's wondering, I calculate: 0.5654% per month target is equivalent to 7% p.a 0.22% per month is equivalent to 2.7% p.a. Shocking!
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DeafEater
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Post by DeafEater on Jan 10, 2018 23:17:50 GMT
Yes for my 0.5654% per month I was working to the advertised AER of 7% and working backwards to get the monthly rate assuming compounding every month. You've actually been slightly over-optimistic in your AER calculation based on December by rounding to 1 DP but yes, it is 'shocking'.
My GEIA account holds only one suspended loan (#437) but I hold 3 other loans to the same company for different turbines. Although none of these other 3 are currently suspended, the updates suggest the borrower isn't paying any interest on any of them. The borrower MAY come good but the loan activity updates are not promising. If AC actually USE their mythical provision fund, it should all come out fine but as far as I'm aware, the AC PF is yet to pay out on anything, ever.
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teddy
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Post by teddy on Jan 10, 2018 23:52:15 GMT
My interest repayments for December on both the GBBA and GEA were non existent. I pretty much knew this but put it down to Christmas and new year as the bulk of my GBBA payments are the last week of the month, but the first 10 days of Jan haven't made up for it. I'm seriously miffed.
1st Sep 2017 to 31st December 2017 total interest on the GBBA = £273
1st May 2017 to 31st August 32017 total interest on the GBBA = £412
I've not withdrawn any funds from the GBBA, so I'm at a loss to explain the above difference.
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teddy
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Post by teddy on Jan 11, 2018 23:27:20 GMT
I estimate my interest rate across my entire AC investments from 1st May to 31st Dec 2017 to be somewhere around 4.5%. My dashboard had been saying around 5.7% average interest for most of last year.
This was what I was suspecting, given the very low frequency of interest payments, but I had no evidence until I sat down and did the figures. What I'm only realising now I'm being shafted is how opaque AC is. At least with Ratesetter, I can see what loans I've lent to, with simple to understand repayment schedules, and the PF pays out immediately a payment is late/missed, or a borrower defaults.
With AC, I get nothing.
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bugs4me
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Post by bugs4me on Jan 12, 2018 10:15:50 GMT
I estimate my interest rate across my entire AC investments from 1st May to 31st Dec 2017 to be somewhere around 4.5%. My dashboard had been saying around 5.7% average interest for most of last year. This was what I was suspecting, given the very low frequency of interest payments, but I had no evidence until I sat down and did the figures. What I'm only realising now I'm being shafted is how opaque AC is. At least with Ratesetter, I can see what loans I've lent to, with simple to understand repayment schedules, and the PF pays out immediately a payment is late/missed, or a borrower defaults. With AC, I get nothing. I'm not convinced that AC in general is opaque but the PF certainly is. AFAIK, there has not been a single instance of the PF actually making good on what any reasonable individual would deem to be a defaulted loan. The AC 'policy' would appear to keep 'kicking the can' into the long grass in the hope that one day, in the not foreseeable future, a few pennies may materialise for lenders/investors rather than simply determine the loan has defaulted. Whilst this may be acceptable to investors who used the MLIA and are not covered by the PF, it is not IMO acceptable regarding the GBBA where lenders/investors had no direct input as to the loans they would be involved in. Of course, the delaying of defaults is not restricted just to AC - many platforms adopt the same approach. But the AC PF is a strange animal to say the least.
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markdirac
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Post by markdirac on Jan 12, 2018 16:16:53 GMT
I don't suppose that the PF is designed to cover these sorts of shortfalls. It has a 3x cover (IIRC) on expected defaults, but the expected defaults are far smaller than the shortfalls reported in this thread.
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rick24
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Post by rick24 on Jan 12, 2018 16:22:43 GMT
There seemed to be a lot of delayed payments related to the Christmas break. Borrowers using it as an excuse to squeeze out some extra days grace and AC staff reduced in Christmas week?
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kmac
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Post by kmac on Jan 12, 2018 17:26:16 GMT
There seemed to be a lot of delayed payments related to the Christmas break. Borrowers using it as an excuse to squeeze out some extra days grace and AC staff reduced in Christmas week? And now the Flu epidemic?
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