Change in Investment Start Dates

Overall this seems a logical and generally positive change. However I think it will mean those buying into a new loan early will be slightly disadvantaged (versus those buying in later) if/when then they look to sell their loan part via the SM. By definition, their accrued interest will be a little higher, so the projected yield to a buyer will be a little lower, so their parts will appear lower down when ranked by yield.

A simple way to help this would be to add finer discrimination of SM discounts, so one doesn't have to add as much as 0.25% more discount to move up.

The way to fix this fully (and address the SM tax quirks) would be to change the T&Cs so that rights to accrued interest remain with the seller, as per many other platforms

fundingsecure

Has this change caused a problem with the SM ?

Currently no loans available on SM. First noticed after midnight.

Edit: Seems that lenders need to relist their loans.

just wanted to see this is a very positive things fundingsecure

Ummm ... I think I missed the obvious implication of the capitalised NEW in that announcement a month ago, as in NEW = new to the platform, and hence excludes renewals which continue to pay interest from the date of activation (normally within a few working hours of the loan filling).

In the "Investments awaiting activation" at the bottom of  www.fundingsecure.com/myaccount/current-investments  NEW loans show days active incrementing from the day of investment whilst renewals remain at 0 days.

Which probably helps explains why large renewals are very slow to fill as any new loans on offer pay instant interest. fundingsecure rather than offering bonuses on the farm building renewal, wouldn't you have been better offering instant interest ?


Having now realised my mistake, I won't be in a hurry to invest in renewals.

If so, that's out of line with what their email said about renewals (accessible via the link above):

"RENEWALS
Anyone rolling over their investment will receive interest up to the point the old loan is closed and the new loan activated. They will then earn interest from the start date of the new loan, ensuring unbroken interest payment.
Anyone choosing not to rollover their investments will receive interest up to the point the new loan is activated and the old loan is closed.
Any new investments in the renewed loan will earn interest from the date they place the bid."

The last sentence doesn't distinguish between renewals of "old" loans and future renewals of "new" loans. However, I guess it may require some intervention at the point of activation.

[My assumption was that rolled-over funds would stay at 0 days until activated, since the funds are still earning interest in the old loan, whilst additional / new funds would start accruing days immediately]

About 2 weeks ago I spoke to a lady at Funding Secure about interest start date for renewals. I was told that they do pay interest from date of investment. I was surprised because this means FS pay double the interest rate on the unfilled part of the loan until it fills. The lady I spoke to confirmed it with a director.

I did suggest that lenders who chose not to renew be repaid each time a new investment is made. That way FS don't pay double the interest rate. FS were going to consider this, but I suspect the software needs to sort out which bids to repay first. The fairest way would be FIFO.