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Post by dan1 on Jan 13, 2020 18:45:50 GMT
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Post by gravitykillz on Jan 13, 2020 19:51:13 GMT
I think alot of ppl are withdrawing which is pushing rates up.
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r00lish67
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Post by r00lish67 on Jan 13, 2020 20:25:04 GMT
I don't understand humans.
First they overreact by thinking RS has an excellent provision fund because they pay too much attention to a rather odd formula RS like to use (which always goes up even when the PF has fallen 40% in a year), then they overreact in the opposite direction by paying too much attention to a stupid article in the press which entirely disregards projected provision fund income. Meet in the middle people!
The Times article is totally irresponsible IMV. Yes, RS's provision fund has been falling, but their loanbook has done better than other rivals recently (wholesale lending debacle notwithstanding). What might make it weaker is a press article driving away investors, driving up rates in the short term but reducing RS's ability to ever be profitable in the long term and/or contribute adequately to the PF.
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r00lish67
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Post by r00lish67 on Jan 13, 2020 20:29:36 GMT
I think alot of ppl are withdrawing which is pushing rates up. Still four million quid of investor money sitting like a lead balloon on top of the 5 year rate at 4.6% though!
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Post by dan1 on Jan 13, 2020 20:32:03 GMT
RS is pretty mass market, at least where P2P is concerned. Only a small fraction of lenders will have stumbled across this site, MSE Forums or the like but MSM is picked up pretty quickly by the news aggregators hence the rising rates (no, I don't think it's coincidence).
I've not seen reports of early repayments for a few weeks, certainly this year. The last thing RS need is folk withdrawing early repayments at higher rates too. Again, I suspect the link is not coincidence.
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ashtondav
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Post by ashtondav on Jan 13, 2020 20:41:22 GMT
Hoovered up a nice wedge at 3.9 in access. Just about acceptable.given the rates on other sites I now want 5.5% on 5 max.
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macq
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Post by macq on Jan 13, 2020 21:15:03 GMT
I don't understand humans. First they overreact by thinking RS has an excellent provision fund because they pay too much attention to a rather odd formula RS like to use (which always goes up even when the PF has fallen 40% in a year), then they overreact in the opposite direction by paying too much attention to a stupid article in the press which entirely disregards projected provision fund income. Meet in the middle people! The Times article is totally irresponsible IMV. Yes, RS's provision fund has been falling, but their loanbook has done better than other rivals recently (wholesale lending debacle notwithstanding). What might make it weaker is a press article driving away investors, driving up rates in the short term but reducing RS's ability to ever be profitable in the long term and/or contribute adequately to the PF. You would think RS would be quick off the mark and have sent out an email refuting the Times piece and explaining again how the fund actually works
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ashtondav
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Post by ashtondav on Jan 13, 2020 21:24:18 GMT
I don't understand humans. First they overreact by thinking RS has an excellent provision fund because they pay too much attention to a rather odd formula RS like to use (which always goes up even when the PF has fallen 40% in a year), then they overreact in the opposite direction by paying too much attention to a stupid article in the press which entirely disregards projected provision fund income. Meet in the middle people! The Times article is totally irresponsible IMV. Yes, RS's provision fund has been falling, but their loanbook has done better than other rivals recently (wholesale lending debacle notwithstanding). What might make it weaker is a press article driving away investors, driving up rates in the short term but reducing RS's ability to ever be profitable in the long term and/or contribute adequately to the PF. You would think RS would be quick off the mark and have sent out an email refuting the Times piece and explaining again how the fund actually works
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Post by df on Jan 13, 2020 21:45:19 GMT
In my view The Times is an "up class" version of The Sun. This type of press is full of distorted facts and direct lies are not uncommon in the articles they publish. I didn't read behind registration wall, but the quotes in the other article suggest that my opinion on The Times remains low.
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macq
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Post by macq on Jan 13, 2020 22:17:03 GMT
You would think RS would be quick off the mark and have sent out an email refuting the Times piece and explaining again how the fund actually works they must have fixed that email glitch by now!
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Post by davee39 on Jan 13, 2020 22:30:35 GMT
The provision fund uses contributions from debt repayments that have not yet been made to offset defaults which have not yet occurred. The Times article is correct in pointing out that the level of 'real' funding is low. With much of the lending being against property it would not take many defaults to wipe out the cash balance. If the fund fell short resulting in an 'event' new money would stop coming in and the pf deficit would continue to worsen. At the same time the exit doors would slam shut as sellers tried to leave. Of course this might not happen, but there is no room for complacency.
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jlend
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Post by jlend on Jan 13, 2020 22:58:27 GMT
The provision fund uses contributions from debt repayments that have not yet been made to offset defaults which have not yet occurred. The Times article is correct in pointing out that the level of 'real' funding is low. With much of the lending being against property it would not take many defaults to wipe out the cash balance. If the fund fell short resulting in an 'event' new money would stop coming in and the pf deficit would continue to worsen. At the same time the exit doors would slam shut as sellers tried to leave. Of course this might not happen, but there is no room for complacency. Although property lending has been increasing it is currently 19% of the total loan book. Most of the lending is still personal loans of 12 to 60 month duration. Property loans on RS have a relatively high turnover as they are typically 12 to 24 months unlike some other property platforms. Of course this is no reason to be complacent and it would be good to see how things evolve in terms of property lending and any issues. When I met with RS before Xmas they had yet to have any call on the PF to cover capital losses on property loans since they started doing property loans in 2015 although they are not complacent and know it will come at some stage. RS say they operate at the lower risk end of property lending, although only time will tell as they expand their lending in this area whether they can keep this up. They certainly have what looks like good track record on property compared to some other p2p sites I have invested with to date at least.
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ashtondav
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Post by ashtondav on Jan 13, 2020 23:03:02 GMT
The provision fund uses contributions from debt repayments that have not yet been made to offset defaults which have not yet occurred. The Times article is correct in pointing out that the level of 'real' funding is low. With much of the lending being against property it would not take many defaults to wipe out the cash balance. If the fund fell short resulting in an 'event' new money would stop coming in and the pf deficit would continue to worsen. At the same time the exit doors would slam shut as sellers tried to leave. Of course this might not happen, but there is no room for complacency. Although property lending has been increasing it is currently 19% of the total loan book. Most of the lending is still personal loans of 12 to 60 month duration. Property loans on RS have a relatively high turnover as they are typically 12 to 24 months unlike some other property platforms. Of course this is no reason to be complacent and it would be good to see how things evolve in terms of property lending and any issues. When I met with RS before Xmas they had yet to have any call on the PF to cover capital losses on property loans since they started doing property loans in 2015 although they are not complacent and know it will come at some stage.
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Post by gravitykillz on Jan 14, 2020 6:29:53 GMT
A good idea would be for p2p companies to create an independent body to measure the strength of provision funds. That would give investors more confidence.
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rogedavi
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Post by rogedavi on Jan 14, 2020 7:35:50 GMT
The problem all P2P companies that operate a PF model have is they are essentially operating like a bank where provision fund is equivalent to capitalisation.
If the PF exhausts, its no different to a run on a bank as investor confidence collapses and will trigger a liquidity event. This coupled with no proper secondary market for troubled loanbooks (incidentally a good example of someone who got this right = ABLRate) and there is a severe risk of multiple FC's occurring. Furthermore the PFs are calculated based on internal model assumptions which seem to change on a quarterly basis to cover up a weakening cash position. It makes sense to look at cash because its the metric that will act as a trigger for a liquidity event.
The FCA reforms focused on compliance and contingency plans, but not so much on the actual risk.
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