Balder
Member of DD Central
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Post by Balder on Feb 19, 2019 15:22:33 GMT
Hope this isn't the start of reduced interest rates.
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ceejay
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Post by ceejay on Feb 19, 2019 15:40:13 GMT
Hope this isn't the start of reduced interest rates. The focus of the message says that they are all about scaling, which is an absolute requirement for ABL to prosper, imho. It's been said here more times than we can count that they need a broader base of borrowers. The dilemma has been, where do you find borrowers who will pass any kind of suitability test who are also prepared to pay c30% rates? I mean, how many of those are there? Scaling might mean that ABL can function on a lower margin, which would be good for everyone. However it might also mean that they can only scale by going for less desperate borrowers, which means lower interest rates at least for some loans. I think that would be a good outcome - the current setup is not sustainable as far as I can see.
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Balder
Member of DD Central
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Post by Balder on Feb 19, 2019 15:43:52 GMT
Hope this isn't the start of reduced interest rates. The focus of the message says that they are all about scaling, which is an absolute requirement for ABL to prosper, imho. It's been said here more times than we can count that they need a broader base of borrowers. The dilemma has been, where do you find borrowers who will pass any kind of suitability test who are also prepared to pay c30% rates? I mean, how many of those are there? Scaling might mean that ABL can function on a lower margin, which would be good for everyone. However it might also mean that they can only scale by going for less desperate borrowers, which means lower interest rates at least for some loans. I think that would be a good outcome - the current setup is not sustainable as far as I can see. I do agree but I don't want them to become another AC so I hope it will be advice and not a copy exercise.
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Post by df on Feb 19, 2019 16:22:40 GMT
Hope this isn't the start of reduced interest rates. Interesting news. Increasing loan flow x10 will probably attract more investors' funds, but the rates will likely be reduced. Whether reduced rates will bring better quality loans is another question? May be it's just me not being observant enough, but I didn't notice that a current average AC's 6% loan carries less risk than 10% loan in the past. We'll have to see what happens, but if it goes that way I can't see my holding on ABL having a considerable increase. It would be good to take advantage of better diversification though, which is currently not great.
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blender
Member of DD Central
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Post by blender on Feb 19, 2019 16:29:42 GMT
The focus of the message says that they are all about scaling, which is an absolute requirement for ABL to prosper, imho. It's been said here more times than we can count that they need a broader base of borrowers. The dilemma has been, where do you find borrowers who will pass any kind of suitability test who are also prepared to pay c30% rates? I mean, how many of those are there? Scaling might mean that ABL can function on a lower margin, which would be good for everyone. However it might also mean that they can only scale by going for less desperate borrowers, which means lower interest rates at least for some loans. I think that would be a good outcome - the current setup is not sustainable as far as I can see. I do agree but I don't want them to become another AC so I hope it will be advice and not a copy exercise. My main platforms are now Abl and AC, and so a copy exercise would not be welcome (and probably not to AC). The Abl model seems inherently niche because it seems to rely on finding the desperate but good prospects that others will not spend the time both to assess and then supervise. The monthly fees are consistent with that model. But you would expect the successful borrowers to refinance asap (elsewhere) and the less successful to struggle on - requiring loads of origination and supervision effort. On the other hand, scaling up is needed to give diversity of borrowers. The six sick pub loans joining one of the two major groups of borrowers worries me. Doing the right thing, I think, scaling up but not losing the USP of the model.
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Post by ablrate on Feb 19, 2019 18:23:59 GMT
we have no intention of copying AC, as good as they are... We are looking to scale our model. It is not the best to say borrowers are 'desperate', yes they are a little more complex but often times it is just about asking for the rate and sticking to the model that you have... which is basically what we do.
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blender
Member of DD Central
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Post by blender on Feb 19, 2019 18:37:26 GMT
Pleased to hear it. If you became a mini-AC some of us would be desperate for another platform.
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Post by df on Feb 19, 2019 20:45:25 GMT
Pleased to hear it. If you became a mini-AC some of us would be desperate for another platform. If "scaling the business" will bring more borrowers to the platform without bringing rates down to below 9% I would probably relocate a proportion of my funds from AC to Abl. Last time I've checked, AC had 18% of my p2p "allowance" and Abl only 4%. Would've liked to slightly rebalance this.
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xtab
Posts: 41
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Post by xtab on Feb 20, 2019 14:26:24 GMT
Pleased to hear it. If you became a mini-AC some of us would be desperate for another platform. If "scaling the business" will bring more borrowers to the platform without bringing rates down to below 9% I would probably relocate a proportion of my funds from AC to Abl. Last time I've checked, AC had 18% of my p2p "allowance" and Abl only 4%. Would've liked to slightly rebalance this. Although originally attracted by the high headline rates of platforms like FS, L*y, MT and FC, my rough calculations are showing that my investments in lower interest % platforms have paid off better overall. That's because of the lower defaults, of course. So I'm similarly slowly reducing my holdings in those four and reinvesting in platforms like Abl, AC and Kflk, amongst others. It'll be interesting to see the long term results of this change.
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Post by df on Feb 20, 2019 15:26:56 GMT
If "scaling the business" will bring more borrowers to the platform without bringing rates down to below 9% I would probably relocate a proportion of my funds from AC to Abl. Last time I've checked, AC had 18% of my p2p "allowance" and Abl only 4%. Would've liked to slightly rebalance this. Although originally attracted by the high headline rates of platforms like FS, L*y, MT and FC, my rough calculations are showing that my investments in lower interest % platforms have paid off better overall. That's because of the lower defaults, of course. So I'm similarly slowly reducing my holdings in those four and reinvesting in platforms like Abl, AC and Kflk, amongst others. It'll be interesting to see the long term results of this change. It becomes a bit more clearer when you sold everything that is sellable. I'm in this situation with Ly and FC (started with both in Q4 2016). Ly. My portfolio consists of non-performing and overdue only. I need 46% to be recovered in order to break even. FC. I'm left with 49 bad debt and 7 late. As it stands today, I've earned 2.4% for all this time, so it looks like I won't have any capital loss. I would've been much better off chucking all this cash into PF protected Zopa accounts and RS for whatever rates were available at the time.
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