j
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Post by j on Aug 2, 2014 23:17:16 GMT
With most of the latest loans being effectively underwritten, one wonders if the p2p industry is effectively going down that route & eventually being sustained & ruled by it?
Whilst this is a symptom of many platforms, not just AC, it begs the question whether the whole ethos of p2p will eventually be forgotten & p2p becomes ruled by bigger/deeper pockets & ultimately big business will take it over? No slight on underwriting as many loans would not have a hope of getting off the ground without it in the first place but one does feel the whole landscape is changing, and fast, to become the opposite of how & why p2p was started. The little man/woman lending a helping hand to another little man/woman. Or is it all too b****y idealistic?!
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oldgrumpy
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Post by oldgrumpy on Aug 3, 2014 7:22:38 GMT
I don't think the little man/woman originally envisaged funding diverse rafts of larger companies or developers to the extent of hundreds of thousands, even millions of pounds for individual projects. Most P2P was based on loans of a few thousand, P2B on loans of a few tens of thousands (all made up of chunks as low as £10). FC still does loans down to not much over £10,000 (there's even one for £5K coming up next Wednesday) and other loans not requiring underwriting. AC and some others funding the larger projects will always need underwriters, will never be pure P2P/P2B - they just allow us to participate in a "bigger picture". I do wonder, however, why with all the extra security provided, and no lender fees, AC does not manage to attract enough lenders to reliably fund all loans under £150K without underwriting. FC does, with security resembling a chocolate padlock.
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j
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Post by j on Aug 3, 2014 8:24:01 GMT
I do wonder, however, why with all the extra security provided, and no lender fees, AC does not manage to attract enough lenders to reliably fund all loans under £150K without underwriting. FC does, with security resembling a chocolate padlock. AC did not have a problem filling such smaller loans till recently (even if it took some time on occasions & in the early days, they did manage to mostly utilise normal lenders to fill the bulk of such loans). I think they are more confident in proceeding with loans now (number & size-wise) knowing underwriting will mop them up, regardless of small lender appetite, in order to meet their growth target of £100m by year end. Contributing factors could be:falling rates (you rightly point out similar rates on other platforms with flimsier security), apathy, protracted drawdown times, possible nervousness with a few loans having repayment issues recently, smaller lenders having their fill, etc. The p2p outlook has & will continue to change. For better or worse remains to be the question.
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Post by chris on Aug 3, 2014 8:30:26 GMT
I don't think the little man/woman originally envisaged funding diverse rafts of larger companies or developers to the extent of hundreds of thousands, even millions of pounds for individual projects. Most P2P was based on loans of a few thousand, P2B on loans of a few tens of thousands (all made up of chunks as low as £10). FC still does loans down to not much over £10,000 (there's even one for £5K coming up next Wednesday) and other loans not requiring underwriting. AC and some others funding the larger projects will always need underwriters, will never be pure P2P/P2B - they just allow us to participate in a "bigger picture". I do wonder, however, why with all the extra security provided, and no lender fees, AC does not manage to attract enough lenders to reliably fund all loans under £150K without underwriting. FC does, with security resembling a chocolate padlock. It's a complex question and whilst we believe we understand why and have plans in place to address this there may be other factors. But I'll give you three: 1) We've converted our biggest lenders into underwriters; 2) FC have spent an order of magnitude or two more than us on advertising to date, but even when their site was as young as ours their biggest loan sizes were around £100k if memory serves with them struggling to fill a few of those. We've achieved much more with our funding than FC albeit in different market conditions; 3) We used to fill all loans under around £300k with relative ease but with the drawdown delays that go hand in hand with secured lending and the rise of the underwriter our lender base has shifted to waiting for loan units to appear on the aftermarket to avoid the period of funds being tied up earning no interest. There are other factors and drivers but IMHO those are the key ones.
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oldgrumpy
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Post by oldgrumpy on Aug 3, 2014 9:05:03 GMT
Drawdown delay has been a problem. However, AC (IMHO) dealt with this very effectively (for me) with the shadow bid facility. New investors don't get this initially. What percentage of AC retail investors actually have shadow bid allowances (calculated by number of people, and by % of cash invested)?
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agent69
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Post by agent69 on Aug 3, 2014 9:45:49 GMT
My biggest concern with the way the market is going is that there are so many large lumps of underwritten loans on the AM, it will shortly be impossible to sell anything.
If I had a bit of the care home and wanted to sell, how long would it take to get past the £1.7m that's currently on offer (and going nowhere fast)?
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j
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Penguins are very misunderstood!
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Post by j on Aug 3, 2014 10:32:52 GMT
I don't think the little man/woman originally envisaged funding diverse rafts of larger companies or developers to the extent of hundreds of thousands, even millions of pounds for individual projects. Most P2P was based on loans of a few thousand, P2B on loans of a few tens of thousands (all made up of chunks as low as £10). FC still does loans down to not much over £10,000 (there's even one for £5K coming up next Wednesday) and other loans not requiring underwriting. AC and some others funding the larger projects will always need underwriters, will never be pure P2P/P2B - they just allow us to participate in a "bigger picture". I do wonder, however, why with all the extra security provided, and no lender fees, AC does not manage to attract enough lenders to reliably fund all loans under £150K without underwriting. FC does, with security resembling a chocolate padlock. It's a complex question and whilst we believe we understand why and have plans in place to address this there may be other factors. But I'll give you three: 1) We've converted our biggest lenders into underwriters; 2) FC have spent an order of magnitude or two more than us on advertising to date, but even when their site was as young as ours their biggest loan sizes were around £100k if memory serves with them struggling to fill a few of those. We've achieved much more with our funding than FC albeit in different market conditions; 3) We used to fill all loans under around £300k with relative ease but with the drawdown delays that go hand in hand with secured lending and the rise of the underwriter our lender base has shifted to waiting for loan units to appear on the aftermarket to avoid the period of funds being tied up earning no interest. There are other factors and drivers but IMHO those are the key ones. Would not offering terms similar or close to those given to underwriters (presumably a greater margin than advertised) to all, or even on a tier system, help reduce AC's reliance on underwriting?
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Post by Jack Barlow on Aug 3, 2014 10:33:11 GMT
agent69, you might be surprised how quickly surplus loan parts that are offered at a few pence discount are snapped up.
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j
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Penguins are very misunderstood!
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Post by j on Aug 3, 2014 10:37:40 GMT
My biggest concern with the way the market is going is that there are so many large lumps of underwritten loans on the AM, it will shortly be impossible to sell anything. If I had a bit of the care home and wanted to sell, how long would it take to get past the £1.7m that's currently on offer (and going nowhere fast)? Couldn't agree more. To give examples, in loans like the plumbing, care home & trade finance, I have invested none or very small amounts, compared to what I would have been happy to invest in such loans (albeit rates have come down) a few months ago for fear of not being able to exit if I need funds quickly. Even loans under £400-£500k are becoming a huge problem since they have so much underwriters who want an immediate exit & list their full holding straight away. It's a vicious circle
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j
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Penguins are very misunderstood!
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Post by j on Aug 3, 2014 10:40:17 GMT
Drawdown delay has been a problem. However, AC (IMHO) dealt with this very effectively (for me) with the shadow bid facility. New investors don't get this initially. What percentage of AC retail investors actually have shadow bid allowances (calculated by number of people, and by % of cash invested)? I disagree a little. I thought AC could have been more forceful, esp in the early days of drawdown problems. On the flip side, I understood AC's position in trying to garner business & build their base so, they were bound to be more flexible/lenient with borrowers than a private individual member/investor.
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Post by chris on Aug 3, 2014 10:49:26 GMT
It's a complex question and whilst we believe we understand why and have plans in place to address this there may be other factors. But I'll give you three: 1) We've converted our biggest lenders into underwriters; 2) FC have spent an order of magnitude or two more than us on advertising to date, but even when their site was as young as ours their biggest loan sizes were around £100k if memory serves with them struggling to fill a few of those. We've achieved much more with our funding than FC albeit in different market conditions; 3) We used to fill all loans under around £300k with relative ease but with the drawdown delays that go hand in hand with secured lending and the rise of the underwriter our lender base has shifted to waiting for loan units to appear on the aftermarket to avoid the period of funds being tied up earning no interest. There are other factors and drivers but IMHO those are the key ones. Would not offering terms similar or close to those given to underwriters (presumably a greater margin than advertised) to all, or even on a tier system, help reduce AC's reliance on underwriting? That doesn't give us the certainty of drawdown plus demotivates underwriters to then pick up any slack.
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oldgrumpy
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Post by oldgrumpy on Aug 3, 2014 10:54:41 GMT
Are you allowed to reveal the approximate % range of underwriters' "commission" for providing their services?
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j
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Penguins are very misunderstood!
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Post by j on Aug 3, 2014 10:56:50 GMT
Would not offering terms similar or close to those given to underwriters (presumably a greater margin than advertised) to all, or even on a tier system, help reduce AC's reliance on underwriting? That doesn't give us the certainty of drawdown plus demotivates underwriters to then pick up any slack. Yup, I understand. On one hand, you have to keep us small investors happy, on the other the underwriters. It's a difficult balance to achieve.
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j
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Penguins are very misunderstood!
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Post by j on Aug 3, 2014 10:58:42 GMT
Are you allowed to reveal the approximate % range of underwriters' "commission" for providing their services? Have asked this before & told no. I've heard figures between 0.5-2% extra bandied about, but no real confirmation. Could be correct or could be more, unless someone with firsthand knowledge can enlighten us
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Post by chris on Aug 3, 2014 11:09:50 GMT
Are you allowed to reveal the approximate % range of underwriters' "commission" for providing their services? Have asked this before & told no. I've heard figures between 0.5-2% extra bandied about, but no real confirmation. Could be correct or could be more, unless someone with firsthand knowledge can enlighten us That's one for andrewholgate to cover but it's less than you think.
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