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Post by GSV3MIaC on Apr 24, 2014 13:37:09 GMT
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pikestaff
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Post by pikestaff on Apr 24, 2014 14:40:49 GMT
I think this development is inevitable as institutions come into the market. It is also necessary, because it's become clear over recent weeks that demand from retail lenders on many platforms has not been growing fast enough to meet borrower demand. There is sure to be some downward pressure on rates, but that's life.
Others will follow but will not necessarily address the lender split in the same way. I'm sure they will all be watching FC's trial with interest...
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jm72
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Post by jm72 on Apr 24, 2014 15:03:06 GMT
Interesting that post states that there is a significant increase in number of loans - evidence not bearing this out with 24 live loans (soon to be 23) on the marketplace at the moment. Only two new put on today so far - one of these closed and taken!
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Post by GSV3MIaC on Apr 24, 2014 16:17:10 GMT
I think you have to wait for the Easter dip to work through the system .. there were quite a few Tuesday/Wednesday, but we are still two days (last friday/monday) short of a full set. I also suspect FC scaled back a bit after the cashback (which was presumably a very temporary patch) given the lack of new investor funds (tax year end probably didn't help either). Have to wait and see what happens next, but there is undoubtedly a bit of a cash pile waiting on new loans at the moment (yesterday's 150k NI farming loan .. normally regarded as well dodgy on two counts .. was Fully Funded in a few hours.).
I guess I am just concerned that FC may be turning into YAB (Yet Another Bank) .. see also ZOPA. If the borrowers were selecting the loan channel / format, that'd be one thing (they do that already by going to FC rather than Barclays or whatever), but having FC get them all and then steer some %age into commercial lender's pockets is fraught with all sorts of moral hazards.
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blender
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Post by blender on Apr 24, 2014 16:41:21 GMT
... If the borrowers were selecting the loan channel / format, that'd be one thing (they do that already by going to FC rather than Barclays or whatever), but having FC get them all and then steer some %age into commercial lender's pockets is fraught with all sorts of moral hazards. I do not see how this could be done without the prior knowledge and consent of the borrower. The process would not be as written on the tin and the T&Cs would presumably be different - the interest rate not being set by auction. Interesting to know if there will be a new version of the T&C's for these whole loan lenders. Presumably also it would be difficult for a borrower to have some loans with the ordinary lenders and some with the whole loan lenders - since the ordinary lenders would not have visibility of the whole loans. If a current borrower takes a whole loan through FC the current lenders are going to want to see that and be aware of the security and priority issues between them and the whole loan lender. Certainly this will produce two classes of lender, and I think we know which class will get FC's attention if repayments become a problem.
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mikeb
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Post by mikeb on Apr 24, 2014 17:46:49 GMT
Certainly this will produce two classes of lender, and I think we know which class will get FC's attention if repayments become a problem. "Today’s news does not mean individual investors will become any less important to us. " Wait a minute, how important were individual investors before this news? I can't decide if that's a good-thing quote or a bad-thing quote! 
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blender
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Post by blender on Apr 24, 2014 18:19:11 GMT
Maybe they think that the announcement of an intention to siphon off some of the loans in a non-transparent manner and to offer them in private to a few corporate and invisible lenders is something that might cause the odd individual lender to feel excluded - reassurance and a pat on the head may help.
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Post by davee39 on Apr 24, 2014 18:39:49 GMT
You only have yourselves to blame. Asking borrowers questions & expecting repayments on time. It does not work like that, loans get dished out to s*rap dealers and dodgy la*yers, profits (& bonuses) get ramped up then it all falls down & gets rescued by taxpayers. That's how Banks are supposed to work. Everyone piling into property at the top of a frothy market should be fair warning.
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Post by davee39 on Apr 25, 2014 15:38:19 GMT
How not to answer a question
Will this affect the interest rates available on the marketplace?
Interest rates are driven by the balance of supply and demand for funds on the marketplace.
Having a diverse range of investors will help to manage this balance and the overall liquidity whilst helping even more businesses access finance.
ie YES!
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Post by aloanatlast on Apr 26, 2014 3:31:25 GMT
It's a bit worrying that the institutions mentioned are playing with other people's money - yours and mine - not their own. Of course the pension funds are desperate. But the public-sector institutions don't seem to have learnt much from the clobbering they got in Iceland.
Hopefully if they get offered the usual slew of back-bedroom branding consultancies and eBay Korean tat sellers, they won't be too keen.
With no secondary market, their main concern should be the likelihood of a borrower surviving an economic downturn. And on that score, FC's loan book is a house of cards.
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Post by davee39 on Apr 26, 2014 8:00:00 GMT
It's a bit worrying that the institutions mentioned are playing with other people's money - yours and mine - not their own. Of course the pension funds are desperate. But the public-sector institutions don't seem to have learnt much from the clobbering they got in Iceland.
Hopefully if they get offered the usual slew of back-bedroom branding consultancies and eBay Korean tat sellers, they won't be too keen.
With no secondary market, their main concern should be the likelihood of a borrower surviving an economic downturn. And on that score, FC's loan book is a house of cards.
You have nicely summed up my thoughts regarding the no of British Jobs created by the Govt lending to pay a tax bill. I support the Gov (and Local Organisations) helping Real Businesses, esp manufacturing, but much of the Garbage is either Buyer Beware or hello secondary market after a month or two.
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blender
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Post by blender on Apr 26, 2014 8:34:12 GMT
Further questioning in another place has caused FC to explain that only the trial will be held in private and that after the trial the whole loans will be visible in the new marketplace. That is good. But also it seems that the allocation will be truly random, with Borrowers not given a choice, which is odd when you consider that the interest rate is not set by the lenders but by FC - this is a different offering.
It seems that the problem that FC have been grappling with is that these commercial lenders will not engage in taking a percentage of every loan, wishing to choose the loans they wish to hold. But at the same time they must not be allowed first refusal of all the loans. Offering whole loans is going to make selection even more important to the commercial lenders - no business plan, no ongoing supervision, no secondary market (why not?) and difficult to acheive diversity within their particular preferences within those loans which are offered whole. My guess is that a large number of loans will need to be offered whole because the take-up will be low, and those loans will then go on to the general market - all sorts of problems there.
The lack of lender cash over the last few months has probably forced FC into this interesting experiment, else how do they grow sustainably? No wonder we are not allowed to view the trial in progress. I would expect to know if any loans come onto the general marketplace which have not been taken up by the commercial lenders in the whole loan trial.
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agent69
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Post by agent69 on Apr 26, 2014 9:24:42 GMT
I assume the best loans go into the whole loan pot and the dregs go into the normal marketplace.
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Post by aloanatlast on Apr 26, 2014 12:38:01 GMT
Cherry-picking has been denied. But if FC decide they need to take say 20% of loans out of the auction pool, to keep rates down, and the way to achieve this is to offer a randomly-chosen 60% to the whole-loan pool, for 1/3 of those to be taken up and the rest kicked back to auction, then that's de-facto cherry-picking.
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blender
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Post by blender on Apr 26, 2014 13:04:29 GMT
Cherry-picking has been denied. But if FC decide they need to take say 20% of loans out of the auction pool, to keep rates down, and the way to achieve this is to offer a randomly-chosen 60% to the whole-loan pool, for 1/3 of those to be taken up and the rest kicked back to auction, then that's de-facto cherry-picking. That's right, and for the trial to be successul I guess that the number of unfunded whole loans will have to be well less than those funded. Else the borrowers will also be upset. We have no real knowledge of who all these commercial lenders are and their preferences for loans, except that we know that FC have been trying to get this going since November, when commercial lenders were first heralded, and so far have not managed. I am guessing they would not be keen on the C- loans, with around 12-13% rate, no business plan, no supervision and no way out before term, it's snakes and ladders. I can see why they want some privacy for the trial. But I do wish FC to be successful in growing.
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