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Post by bob1981 on Feb 16, 2015 10:23:38 GMT
I'm new to P2x and recently signed up for FC to give it a try. I setup autobid to try and pick up loans around 8.5% (after fees & bad debts) for any bands, however most of those are not making it as the recent batch of loans are heading to be much lower. However I've tried out the secondary market and just picked up a £20 part for A+ at 11% even though it had a 3% premium. That beats all the upcoming auctions by miles, and without the premium, the part would be hugely higher than any of the current auctions at A+.
So I have to assume that really good priced auctions do come up. Is it just a cause of waiting?
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Post by Deleted on Feb 16, 2015 10:35:10 GMT
The rate you can get is dependant on demand and supply. Right now FC rates are waaaay down (lots of reasons and you may want to read some of the other threads on this forum) but were pretty attractive in October/November.
To resolve this you need a bunch of Portals with different strategies for each. You also need a big bottle of patience and think long term (6 months- 1 year) not 1 week to 1 month in terms of you investments. Frustrating but worth it if you want to get a better rate.
Good luck
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baldpate
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Post by baldpate on Feb 16, 2015 10:38:04 GMT
Have a look at the details for that loan - in particular the total value lent. If it's the recent one I'm thinking of, the amount was HUGE (£0.5M if I recall) - which is why the rate was so high. Very much the exception.
Rates oscillate with time. We are still in the aftermath of the Xmas/New Year lull, when rates fell very low. They are picking up a bit now, but are nowhere near what they were in October/November. As you have found, you will be lucky to pick up A+ loans on the SM at the returns you are seeking (i.e. at a gross rate of around 10%).
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Post by bob1981 on Feb 16, 2015 10:39:43 GMT
For example 47308 (from two months ago) is A+ and could have be had at 13.9%. So after fees and debts that is 12.3%!!
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Post by goldservice on Feb 16, 2015 10:41:08 GMT
Welcome to this crazy world! Yes, some really well priced auctions really do come up. Sometimes, the larger loans (they can be as big as £250,000) finish at a good rate (say, 12-12.5% for an A). But the best rates are obtained when a borrower decides to close his auction early. This can mean that the top rates are still over 14%. Some lenders deliberately put a lot of bids at high rates on lots of auctions in the hope that they will catch an 'early closer' - then they flip them to sell at a profit on the secondary market. But early closers can be elusive and when they do show up, they can be at medium rather than high rates. Most of the early closers since mid-December have been close to 11% for A risk loans, for example. Hope this helps.
ps There is a price to pay for loan parts bought at a premium if you are a tax payer. This price is not included in the quoted Buyer Rate. I'll let the experts explain this - there is a separate thread on it.
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Post by bob1981 on Feb 16, 2015 10:45:07 GMT
Have a look at the details for that loan - in particular the total value lent. If it's the recent one I'm thinking of, the amount was HUGE (£0.5M if I recall) - which is why the rate was so high. Very much the exception. Rates oscillate with time. We are still in the aftermath of the Xmas/New Year lull, when rates fell very low. They are picking up a bit now, but are nowhere near what they were in October/November. As you have found, you will be lucky to pick up A+ loans on the SM at the returns you are seeking (i.e. at a gross rate of around 10%). Thanks, that is a good observation I'd not thought about. The rates are probably very tied to the total loan amounts of the current loans. If some really big loans appear they will mop up all the money and rates will rise. At the moment there is about £250,000 of loans completing in the next 24 hours, I'll have to keep an eye on how that effects rates.
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Post by davee39 on Feb 16, 2015 10:52:31 GMT
Assuming you want to diversify across the magic 100 loans, I think your target may need to be a little lower.
I only look at loans for more than £100k, and drop out when the after fees & defaults return falls below 7.5% (manual bidding).
Because many loan parts are bought at close to the top of the rate band for a quick sale you may find it more rewarding to just buy on the secondary market if you cannot bid at the end. Autobid can get you some bad loans, usually the ones no one else wants.
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blender
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Post by blender on Feb 16, 2015 10:58:21 GMT
Have a look at the details for that loan - in particular the total value lent. If it's the recent one I'm thinking of, the amount was HUGE (£0.5M if I recall) - which is why the rate was so high. Very much the exception. Rates oscillate with time. We are still in the aftermath of the Xmas/New Year lull, when rates fell very low. They are picking up a bit now, but are nowhere near what they were in October/November. As you have found, you will be lucky to pick up A+ loans on the SM at the returns you are seeking (i.e. at a gross rate of around 10%). Thanks, that is a good observation I'd not thought about. The rates are probably very tied to the total loan amounts of the current loans. If some really big loans appear they will mop up all the money and rates will rise. At the moment there is about £250,000 of loans completing in the next 24 hours, I'll have to keep an eye on how that effects rates. Have a look at this FC blog, Bob1981, to get an idea of the volumes and recent changes. It is really useful. www.fundingcircle.com/blog/2015/02/
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Post by longjohn on Feb 16, 2015 11:05:36 GMT
If you have the time available you should check each loan and bid manually.
Autobid doesn't really work in your favour. You'll not get the top rate in any auction and it picks up the dross as well decent loans. This gives you a riskier portfolio for less than optimum interest.
John
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Post by GSV3MIaC on Feb 16, 2015 11:09:43 GMT
Thanks, that is a good observation I'd not thought about. The rates are probably very tied to the total loan amounts of the current loans. If some really big loans appear they will mop up all the money and rates will rise. At the moment there is about £250,000 of loans completing in the next 24 hours, I'll have to keep an eye on how that effects rates. The real reason is that autobid, for most users, will throw in their money at a fairly low rate, but only up to 0.5% or 1% of their total funds, and obviously only up to their available funds at that time. For loans under £80k or 100k, autobid soaks up a large slice, and results in a lowish rate. For really small loans autobid may soak up the lot, and the loan can even close at MBR. For £200k or £500k loans autobid can still only soak up the same VALUE (£80k or so), so there is a much larger amount looking for canny manual bidders, 'flippers', (or 'underwriters') etc. to take on the remainder (often to an exposure WAY more than 1% of their funds) and pass it on at some future date when there are more buyers with funds who want some. That's one of the reasons FC runs large (>£250k) auctions over 2 weeks instead of one, but still the rate normally comes out much higher. And when the parts are up for resale (from the flippers who bought way too much at a high rate) there are more parts for sale at any time, so the markup they can get away with is lower, and the end buyer still gets a better rate than one a small / 'rarely offered' loan. As others have said, the rates cratered over Xmas when the loan supply was reduced by about 4x (and the repayments kept coming). That chased away, I think, some of the 'whole loan' buyers, so then there was a temporary glut in the main auction market (120+ loans IIRC), which gave higher rates .. but that has now passed through (whole loan buyers are probably buying more again) and we are back in a drought (60 loans around this AM, and some of them closed at MBR, and most of the rest at pitiful rates, compared to the fairly safe 6%+ available over on ratesetter). Unlike the stock market where it is alleged to be all about 'time', in the FC market it is definitely more about 'timING'.
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markr
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Post by markr on Feb 16, 2015 11:30:48 GMT
Yes as others have explained, the best rates come from early closing auctions and very large loans, but to snag these rates (especially the early closers) requires patience, time and a fair amount of capital tied up in bidding (essentially you need to bid in every loan as it is listed, just in case it closes early).
Autobid never buys loans sold with a premium (or discount) so it is possible to find good rates on the secondary market manually. This is getting harder these days because there are robots scouring the market for the best rates, but these robots generally won't buy parts at 3% markup (they are attempting to make a quick turnaround, buying tasty parts at low markup and reselling quickly at a higher markup, so they aren't interested in 3% parts because they can't make a profit).
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TitoPuente
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Post by TitoPuente on Feb 16, 2015 16:58:03 GMT
Just one important factor to throw in is the value of time. A simple example: It is basically the same to get a 6% A+ bid accepted today than a 12% A+ bid accepted after waiting 6 months (assuming a one year hold). All the return and yield figures that FC show completely ignore the funds that are on hold.
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Post by GSV3MIaC on Feb 16, 2015 18:01:38 GMT
Yep, another reason the secondary market can be a good deal .. You get interest from the minute you buy a part. If you pay a premium you jut have to hope the borrower does not repay early.
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