j1
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Post by j1 on Mar 15, 2018 23:27:09 GMT
Does anyone know why there are so many -1% discounted loans on the SM?
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IFISAcava
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Post by IFISAcava on Mar 15, 2018 23:32:01 GMT
Does anyone know why there are so many -1% discounted loans on the SM? -flight out of high risk loans after Collateral -general concerns about P2P at the moment, especially valuations and development loans -FS default rate -FS governance of loans -tax advantages of selling early vs holding to term outweigh even a 1% discount
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mikes1531
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Post by mikes1531 on Mar 15, 2018 23:40:52 GMT
Does anyone know why there are so many -1% discounted loans on the SM? -flight out of high risk loans after Collateral -general concerns about P2P at the moment, especially valuations and development loans -FS default rate -FS governance of loans -tax advantages of selling early vs holding to term outweigh even a 1% discount And very few buyers -- because of the first four points noted above.
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IFISAcava
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Post by IFISAcava on Mar 15, 2018 23:52:47 GMT
-flight out of high risk loans after Collateral -general concerns about P2P at the moment, especially valuations and development loans -FS default rate -FS governance of loans -tax advantages of selling early vs holding to term outweigh even a 1% discount And very few buyers -- because of the first four points noted above. True - but for those who want to take a risk there are some stonking good returns to be had for buyers (so long as default rates aren't much higher than anticipated and/or the discounted loans are renewed)
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oldgrumpy
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Post by oldgrumpy on Mar 15, 2018 23:54:53 GMT
It would be even more interesting if FS reversed their policy of limiting discounts to 1%  . I'd buy a few. (And sell a few) |
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Post by mrclondon on Mar 16, 2018 0:13:09 GMT
Does anyone know why there are so many -1% discounted loans on the SM? -flight out of high risk loans after Collateral -general concerns about P2P at the moment, especially valuations and development loans -FS default rate -FS governance of loans -tax advantages of selling early vs holding to term outweigh even a 1% discount All true, but in addition there is a liquidity squeeze at this time of year as people who have withdrawn funds from flexible cash ISAs need to replace the funds before the end of the tax year. And in the current climate the only chance of achieving a quick sale is to offer a 1% discount. (I picked up several hundred pounds earlier today of a loan that had only been drawn down a few weeks at a 1% discount. Christmas has come early for SM bargain hunters.)
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Mar 16, 2018 0:49:37 GMT
Now there is another reason. Don't buy at 1% discount because tomorrow FS might allow 2% discount.
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Post by df on Mar 16, 2018 2:30:34 GMT
-flight out of high risk loans after Collateral -general concerns about P2P at the moment, especially valuations and development loans -FS default rate -FS governance of loans -tax advantages of selling early vs holding to term outweigh even a 1% discount All true, but in addition there is a liquidity squeeze at this time of year as people who have withdrawn funds from flexible cash ISAs need to replace the funds before the end of the tax year. And in the current climate the only chance of achieving a quick sale is to offer a 1% discount. (I picked up several hundred pounds earlier today of a loan that had only been drawn down a few weeks at a 1% discount. Christmas has come early for SM bargain hunters.) It must be mainly ISA. Other reasons "helped" too. I now have everything I want to sell listed at -1% with very little success this week. I may have to pause my subscriptions to "new" FS property loan offerings and review my failing strategy in April. I hope it will go back to "normal", but also prepared to see the increase of "unredeemed" in my FS loan book.
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aj
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Post by aj on Mar 16, 2018 8:28:37 GMT
Now there is another reason. Don't buy at 1% discount because tomorrow FS might allow 2% discount. Not going to happen for at least another month. They'll be sitting and hoping that next years ISA allowance mops up a lot of these 1% discounts. If it does, I'm not sure they'll change it at all. The weird tax arrangement with FS means that the secondary market is only worthwhile if you're not paying tax. Therefore their secondary market relies on ISA allowances, and lots of peoples will be used up!
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SteveT
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Post by SteveT on Mar 16, 2018 8:34:40 GMT
The weird tax arrangement with FS means that the secondary market is only worthwhile if you're not paying tax. Therefore their secondary market relies on ISA allowances, and lots of peoples will be used up! It's also worthwhile for company lenders, who are taxed on trading profit as opposed simply to interest.
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IFISAcava
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Post by IFISAcava on Mar 16, 2018 8:50:31 GMT
The weird tax arrangement with FS means that the secondary market is only worthwhile if you're not paying tax. Therefore their secondary market relies on ISA allowances, and lots of peoples will be used up! It's also worthwhile for company lenders, who are taxed on trading profit as opposed simply to interest. It's also worthwhile if you want to sell up and remove default risk within an ISA irrespective of tax
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phil
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Post by phil on Mar 16, 2018 9:02:46 GMT
Does anyone know why there are so many -1% discounted loans on the SM? -tax advantages of selling early vs holding to term outweigh even a 1% discount What would tax advantages be of selling early?
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jlend
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Post by jlend on Mar 16, 2018 9:18:03 GMT
All true, but in addition there is a liquidity squeeze at this time of year as people who have withdrawn funds from flexible cash ISAs need to replace the funds before the end of the tax year. And in the current climate the only chance of achieving a quick sale is to offer a 1% discount. (I picked up several hundred pounds earlier today of a loan that had only been drawn down a few weeks at a 1% discount. Christmas has come early for SM bargain hunters.) It must be mainly ISA. Other reasons "helped" too. I now have everything I want to sell listed at -1% with very little success this week. I may have to pause my subscriptions to "new" FS property loan offerings and review my failing strategy in April. I hope it will go back to "normal", but also prepared to see the increase of "unredeemed" in my FS loan book. Interesting I think it's mainly a proportion of people leaving p2p or reducing their p2p investments that is causing liquidity issues on a number of platforms. There will be various reasons people are doing this. There will of course be a lot of people staying for the long term.
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aj
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Post by aj on Mar 16, 2018 10:11:11 GMT
-tax advantages of selling early vs holding to term outweigh even a 1% discount What would tax advantages be of selling early? The seller will pay no tax on their accrued interest*. On repayment, the buyer will be liable for tax not only on the interest they have earned but also the interest accrued by the seller. Outside of an ISA, this somewhat takes the shine off a 1% discount. *If loan part was bought on primary market.
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michaelc
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Post by michaelc on Mar 16, 2018 16:22:05 GMT
Even the PM seems a little clogged up. 8 loans with a 9th due to be added in 40 minutes....
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