stub8535
Member of DD Central
personal opinions only. Not qualified to advise on investment products.
Posts: 1,442
Likes: 945
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Post by stub8535 on Sept 13, 2017 21:03:37 GMT
The issue that needs to be addressed IMO is the ability for Cashback hunters to sell out immediately (or try to) as soon as their accounts have been credited with the cashback. This should be ruled out. On £100k+ you get 4% cashback on drawdown. That's £4k in the back pocket for £100k on Day 1 and then list it all for sale and there's the possibilty to grab money for nothing. The amounts for sale in the recent CB tranches suggests that might have happened. I cashbacked on them and invested just over £5k in total to get 0.5% but I'm holding. I don't know how complicated it would be to write the software so that CB was only payable after holding the loan parts for x months or even until maturity but as it stands the cashback incentive does seem open to 'abuse' and in a way that's detrimental to the working of the SM. Yes it sells the PM but it then clogs up the SM as once people have pocketed the CB they look to sell out and flip. Some change needs to be made in future I would suggest. At least the cashback hunters aren't finding it easy to liquidate their funds at present. Probably a 1% bonus rate on PM purchases and no cashback is better because then only investors who hold will benefit. That seems fairer. As regards the smaller tranches I think this is a good idea. I agree with most of this (if cashback is given, I think it should only be given for the chunk that is held to term). But I think cashback actually makes the loan fill more slowly. I'm less likely to invest in a loan that has cashback for the SM reasons you give. My first preference would be to abolish cashback and put the savings into the a slightly higher rate for everybody. I recognise that there are tax advantages to cashback but this feels like a loophole waiting to be closed. Having said this, maybe the cashback is only tax-free if it's paid instantly rather than at term. I don't know much about the reason for it being tax-free.... Cash back is classed as an incentive to trade and so is not taxed iirc. I also see the cashback percentage being worked out on the cummulative lending on simultaneous tranche lending leading to problems for coll. 4 loans at 25k from an investor gets the 100k bonus rate. Daft. Think about the precendence it sets for the other end of the loan cycle. Would those investors be happy to recieve payment on just 1 of the 4 loans if there is a partial payment? How may it be administered through trades? Cashback loans were shunned on the sm by many investors on FS. Same could develop on coll but coll do not operate discounts and premiums.
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hazellend
Member of DD Central
Posts: 2,361
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Post by hazellend on Sept 13, 2017 21:55:12 GMT
I love cashback but I am an investor and not a flipper. Secondary market illiquidity doesn't bother me.
In fact, I get a slight sadistic pleasure from seeing people trying and failing to flip or panic sell on the whiff of a false slightly negative ruomour on the forum.
Also, collateral makes money from an illiquid SM so there is some benefit to the financial health of the company.
A SM without discounting is always going to have periods of illiquidity.
For example, if I want to liquidate quickly on ABL rate I could discount by 10% and be out within hours.
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badersleg
Member of DD Central
Posts: 180
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Post by badersleg on Sept 25, 2017 17:01:38 GMT
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Post by elephantrosie on Nov 5, 2017 11:29:48 GMT
nothing interesting on SM now...
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Post by df on Nov 5, 2017 19:03:09 GMT
nothing interesting on SM now... There wouldn't be if you were investing in every new loan for the past 6 months, unless you didn't have enough funds at the time to invest in what you wanted.
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Post by elephantrosie on Nov 10, 2017 3:22:28 GMT
SM overflow now...
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elliotn
Member of DD Central
Posts: 3,063
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Post by elliotn on Nov 10, 2017 6:16:39 GMT
Picked up some goodies this morning, like Xmas come early.
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tomp
Member of DD Central
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Post by tomp on Nov 10, 2017 8:31:38 GMT
Are you in a different time zone ? Or just can't sleep ?
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Post by elephantrosie on Nov 10, 2017 14:08:21 GMT
im based in the uk. i have the habit of sleeping early and waking up at odd hours.
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Post by valuehunter on Nov 10, 2017 18:23:09 GMT
Managed to pick up some more 14% bolton...the best value tranche by some distance IMHO
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Post by spareapennyor2 on Nov 28, 2017 14:20:24 GMT
new loan 1 of 4 12% not seen e mail yet
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elliotn
Member of DD Central
Posts: 3,063
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Post by elliotn on Nov 28, 2017 16:16:10 GMT
new loan 1 of 4 12% not seen e mail yet Also platform update in New Loans thread.
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msenanna
Member of DD Central
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Post by msenanna on Dec 22, 2017 16:19:08 GMT
SM overflowing with different properties - never seen so many!
Is this usual for the pre-Christmas period?
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elliotn
Member of DD Central
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Post by elliotn on Dec 22, 2017 16:28:09 GMT
Plenty of residential properties too.
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Post by df on Dec 23, 2017 0:13:06 GMT
SM overflowing with different properties - never seen so many! Is this usual for the pre-Christmas period? I don't think there were any property loans on Collateral this time last year. Since large property loans were introduced, SM overflowing is a regular feature. It may look like lots of loans. Currently there are 43 on SM, but many of them are various parts/tranches of the same loans. In reality there are 10 loans on SM (one of them is 5 days overdue and some have less than 1 month term left).
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