|
Post by westonkevRS on Oct 9, 2015 20:17:25 GMT
We don't have the data because we don't have the application. If we are not near the top of the tables, people don't see RateSetter and don't click on our loan offer. The only ones that do are higher risk customers that we don't really want and have probably already been declined by the lenders higher up the tables. Data I do have is that higher APR customers are more likely to default. This will be because they are higher risk (hence the higher APR) but also the higher APR in itself causes negative actions. Customers on a very low rate know they are on a good rate and tend to pay. I can't provide here the data on the last fact, as I don't want to disclose details on our range of APRs. Kevin. So higher rates give a lower footfall rather than a lower conversion. Do you pay more into the provision fund when the rate is higher? Higher rates have lower footfall, and lower acceptance rates. A double whammy, and those that get through are more likely to default as well. But yes we practice "rate for risk", the APR is linked to the risk of the deal and borrower with higher Provision Fund contributions. Kevin.
|
|
bigfoot12
Member of DD Central
Posts: 1,817
Likes: 816
|
Post by bigfoot12 on Oct 10, 2015 16:53:28 GMT
Higher rates have lower footfall, and lower acceptance rates. A double whammy, and those that get through are more likely to default as well. But yes we practice "rate for risk", the APR is linked to the risk of the deal and borrower with higher Provision Fund contributions. Kevin. Thanks, how does the provision fund deal with the economic cycle? Do you imagine you might put more in if you think the cycle is turning? I know that your default rate is safely below your forecast at the moment, but the economy has been quite benign. Sometime, maybe next year, maybe in six years there will be a bad year.
|
|
|
Post by westonkevRS on Oct 11, 2015 19:42:00 GMT
Higher rates have lower footfall, and lower acceptance rates. A double whammy, and those that get through are more likely to default as well. But yes we practice "rate for risk", the APR is linked to the risk of the deal and borrower with higher Provision Fund contributions. Kevin. Thanks, how does the provision fund deal with the economic cycle? Do you imagine you might put more in if you think the cycle is turning? I know that your default rate is safely below your forecast at the moment, but the economy has been quite benign. Sometime, maybe next year, maybe in six years there will be a bad year. The simple truth is that we do not know how the Provision Fund and RateSetter will perform in a recession, we've always operated in benign times. For what my tuppence is worth, I think defaults and the Provision Fund will be fine. The issue for the P2P industry as a whole is that lenders will get worried, and start putting cash into government backed safety zones irrespective of returns. P2P platforms will struggle with volumes and platform viability will be the issue, not defaults. Luckily for RateSetter we are already profitable and have over £25m in the bank (and another £16m in the Fund)! To answer your question though, we are trying to grow the fund larger now than is necessary. Hence the coverage ratio which although volatile, is prudently calculated. The Fund size continues to grow in absolute terms. Obviously during the recession we can shift the payments in at the expense of RMM Ltd, or through overall higher APRs to the borrower. But I'd rather not try and get more money during the rainy days, better to do it now. I've worked through enough recessions to know that's a bad idea, people have short memories. Kevin.
|
|
|
Post by GSV3MIaC on Oct 11, 2015 20:21:19 GMT
But I'd rather not try and get more money during the rainy days, better to do it now. I've worked through enough recessions to know that's a bad idea, people have short memories. Kevin. Could you please explain that to the government .. any/all government!! Or maybe Kev for Chancellor??
|
|
|
Post by p2plender on Oct 13, 2015 12:19:31 GMT
Did RS just dip the 'fund' to liquidise the monthly there Kev? £500k+ big ones thrown in as the lend side was drying up. 4.5% for the monthly, matching our friends in Oz.
|
|
|
Post by westonkevRS on Oct 13, 2015 16:19:36 GMT
Did RS just dip the 'fund' to liquidise the monthly there Kev? £500k+ big ones thrown in as the lend side was drying up. 4.5% for the monthly, matching our friends in Oz. Currently (but never say never, discuss) the Provision Fund is not used for lending. Occasionally RateSetter RMM Ltd money is used to provide liquidity, but this is rare.
|
|