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Post by overthehill on Feb 13, 2022 13:04:13 GMT
Have the borrower interest rates, setup/exit fees ever been published ? I thought this was a FCA requirement which is now being enforced rather than waved about.
How does the loan penalty interest rate work in practice ?
The recent loans are definitely not filling as quickly regardless of whether you still think the rates are competitive or not ? About 5 loans still not filled.
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ilmoro
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Post by ilmoro on Feb 13, 2022 14:06:35 GMT
Somo aren't a regulated P2P platform (ie no article 34h permission) so none of the COBS rules that govern disclosure of rates etc apply.
Remember Somo are the borrower/lender, they then assign the loan/security to lenders under some form of trust.
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Greenwood2
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Post by Greenwood2 on Feb 13, 2022 15:07:29 GMT
Have the borrower interest rates, setup/exit fees ever been published ? I thought this was a FCA requirement which is now being enforced rather than waved about.
How does the loan penalty interest rate work in practice ?
The recent loans are definitely not filling as quickly regardless of whether you still think the rates are competitive or not ? About 5 loans still not filled.
Somo say (in their 'Global Lender Provisions') that they charge the borrower a slightly higher rate than the lender rate, they give an example of the borrower being charged 1.25% per month with Somo taking 0.25% and the Lenders getting 1%. In the good old days 1% a month was the standard lender rate. I don't know if that % split is used for lower lender rates. As far as I've seen when they say they are charging the penalty interest rate they do, but they don't start charging it immediately a loan is late, it has to be seriously in default. It gets mentioned in the loan updates. Lower rate loans are taking longer to fill, but there were a lot of loans on Friday and I don't think any funds pledged over the weekend will be allocated until tomorrow so how slowly these ones are filling will be revealed later tomorrow morning when they sort out the weekend bids.
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Post by c64 on Feb 14, 2022 15:45:58 GMT
"Slightly" higher? No, they pay almost twice the rate we receive. See under "Borrowers" -> "Product guide and rates" from their dropdown menu. A couple of months ago I guessed the borrower rates for my portfolio and reckoned that SoMo are getting about 40% of the return on average, and I am getting about 60%. Of course SoMo have to pay for staff, website, all that expensive recovery action and still make a profit.
The default rate is typically applied when the borrower ceases having a plausible plan for payment and is then "rolled" i.e. accrued until eventual recovery rather than paid monthly, because the payments have stopped coming by then anyway. Any incoming payments pay off the capital first, not the interest. Better for tax that way, because if there was ever eventually a default on the remainder, you have at least got zero interest to pay tax on, rather than having received the interest but then have a larger capital loss you can't do anything with (no peer-to-peer loss relief with SoMo losses).
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Greenwood2
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Post by Greenwood2 on Feb 14, 2022 17:40:59 GMT
"Slightly" higher? No, they pay almost twice the rate we receive. See under "Borrowers" -> "Product guide and rates" from their dropdown menu. A couple of months ago I guessed the borrower rates for my portfolio and reckoned that SoMo are getting about 40% of the return on average, and I am getting about 60%. Of course SoMo have to pay for staff, website, all that expensive recovery action and still make a profit.
The default rate is typically applied when the borrower ceases having a plausible plan for payment and is then "rolled" i.e. accrued until eventual recovery rather than paid monthly, because the payments have stopped coming by then anyway. Any incoming payments pay off the capital first, not the interest. Better for tax that way, because if there was ever eventually a default on the remainder, you have at least got zero interest to pay tax on, rather than having received the interest but then have a larger capital loss you can't do anything with (no peer-to-peer loss relief with SoMo losses).
If their calculation was that they needed the original 0.25% off the top to cover costs and make a profit, they probably still need that now even though total rates have gone down.
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p2pfan
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Post by p2pfan on Feb 14, 2022 23:32:52 GMT
The reason there are still three loans from last week that have not been filled is they are all paying 4.8% Standard Rate or 6% Family Rate.
It means, using the true rate of inflation, one will be losing money in real terms by lending to the borrowers.
That's why the loans are not getting filled.
SoMo have slashed their interest rates massively in the last several months. Was worth tolerating the various challenges with lending via the platform, such as the awful customer service, for the higher rates, but not for these terrible returns.
Very disappointing.
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Greenwood2
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Post by Greenwood2 on Feb 15, 2022 14:39:02 GMT
The reason there are still three loans from last week that have not been filled is they are all paying 4.8% Standard Rate or 6% Family Rate. It means, using the true rate of inflation, one will be losing money in real terms by lending to the borrowers. That's why the loans are not getting filled. SoMo have slashed their interest rates massively in the last several months. Was worth tolerating the various challenges with lending via the platform, such as the awful customer service, for the higher rates, but not for these terrible returns. Very disappointing. 6% doesn't put me off too much as long as the LTVs are low. The obvious comparison is Loanpad at 3% - 4%. There were 10 loans of total value about £1.7M launched on Friday afternoon, with only about £200,000 left in three loans currently. Seven loans fully funded and about £1.5M invested, not so dusty.
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michaelc
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Post by michaelc on Feb 16, 2022 17:34:01 GMT
The reason there are still three loans from last week that have not been filled is they are all paying 4.8% Standard Rate or 6% Family Rate. It means, using the true rate of inflation, one will be losing money in real terms by lending to the borrowers. That's why the loans are not getting filled. SoMo have slashed their interest rates massively in the last several months. Was worth tolerating the various challenges with lending via the platform, such as the awful customer service, for the higher rates, but not for these terrible returns. Very disappointing. 6% doesn't put me off too much as long as the LTVs are low. The obvious comparison is Loanpad at 3% - 4%. There were 10 loans of total value about £1.7M launched on Friday afternoon, with only about £200,000 left in three loans currently. Seven loans fully funded and about £1.5M invested, not so dusty. You don't know who is investing in them. It could even be Somo themselves. As a general point, you'd surely be mad to invest in a 6% fixed for up to several years with inflation taking off ?
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Greenwood2
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Post by Greenwood2 on Feb 16, 2022 18:09:16 GMT
6% doesn't put me off too much as long as the LTVs are low. The obvious comparison is Loanpad at 3% - 4%. There were 10 loans of total value about £1.7M launched on Friday afternoon, with only about £200,000 left in three loans currently. Seven loans fully funded and about £1.5M invested, not so dusty. You don't know who is investing in them. It could even be Somo themselves. As a general point, you'd surely be mad to invest in a 6% fixed for up to several years with inflation taking off ? With NS&I bragging about offering 1.3% for three years, 6% for 9 or 12 month duration loans doesn't seem that bad to me. Where are you getting better rates?
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Greenwood2
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Post by Greenwood2 on Feb 16, 2022 18:33:47 GMT
6% doesn't put me off too much as long as the LTVs are low. The obvious comparison is Loanpad at 3% - 4%. There were 10 loans of total value about £1.7M launched on Friday afternoon, with only about £200,000 left in three loans currently. Seven loans fully funded and about £1.5M invested, not so dusty. You don't know who is investing in them. It could even be Somo themselves.As a general point, you'd surely be mad to invest in a 6% fixed for up to several years with inflation taking off ? I suspect at 1.5M it is a bit over what they would want to commit on a few loans, but they often (always) do partially fund loans anyway.
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Post by davefoz on Feb 18, 2022 7:40:51 GMT
Increasingly disappointing rates / higher LTVS and longer to go live. One to keep an eye on as the economy become more turbulent. Whilst I won’t be commuting further funds to Somo - are there better / safer options out there
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p2pfan
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Post by p2pfan on Feb 18, 2022 9:20:13 GMT
Increasingly disappointing rates / higher LTVS and longer to go live. One to keep an eye on as the economy become more turbulent. Whilst I won’t be commuting further funds to Somo - are there better / safer options out there I agree. Somo used to be one of my favourite platforms. However, the offerings in recent weeks have generally been relatively poor. That's why some of they are struggling to get funded in a way that didn't happen before. These are higher risk borrowers, with high LTVs. The much-reduced interest rates now being offered don't make them worthy investments. I'm therefore focusing my lending elsewhere, where there are loans with a considerably superior risk-reward ratio being offered.
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Post by davefoz on Feb 18, 2022 15:37:51 GMT
Increasingly disappointing rates / higher LTVS and longer to go live. One to keep an eye on as the economy become more turbulent. Whilst I won’t be commuting further funds to Somo - are there better / safer options out there I agree. Somo used to be one of my favourite platforms. However, the offerings in recent weeks have generally been relatively poor. That's why some of they are struggling to get funded in a way that didn't happen before. These are higher risk borrowers, with high LTVs. The much-reduced interest rates now being offered don't make them worthy investments. I'm therefore focusing my lending elsewhere, where there are loans with a considerably superior risk-reward ratio being offered. Which alternative would you recommend ??
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p2pfan
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Post by p2pfan on Feb 18, 2022 16:14:06 GMT
The tables have turned. Whereas SoMo used to pay more, the likes of CrowdProperty now often pay a higher interest on first charge loans. But, due to the competition, it is hard to get a decent amount allocation on loans on CrowdProperty.
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Post by overthehill on Feb 18, 2022 16:14:16 GMT
I agree. Somo used to be one of my favourite platforms. However, the offerings in recent weeks have generally been relatively poor. That's why some of they are struggling to get funded in a way that didn't happen before. These are higher risk borrowers, with high LTVs. The much-reduced interest rates now being offered don't make them worthy investments. I'm therefore focusing my lending elsewhere, where there are loans with a considerably superior risk-reward ratio being offered. Which alternative would you recommend ?? There is a hotel on Kuflink at the moment where you can get 6.6% for 20% LTV.
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