happy
Member of DD Central
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Post by happy on Sept 26, 2016 9:13:24 GMT
Kevin, my understanding is that Woodford and Artemis are equity investors in your business and not lenders. So, it is possible for you to have a commitment to retail lenders while at the same time taking investment from institutional equity investors - which is what you have done. I am not in a position to know the internal workings of your company. However, I think you will find it hard to deny that it is in the interests of equity investors to see your profit margins at a maximum. One way of doing this is for you to borrow as cheaply as you can and to lend at the highest rates you can. Judging by the comments on this forum, many lenders feel that they are not getting the deal they once did and see a concerted downward pressure on lending rates. You may not care about this if you are attracting new lenders who are only too happy to get anything above the derisory rates offered on conventional deposit accounts. However, "newbies" in my view quickly get over this euphoria and become hardened by experience. Old hands in the meantime are telling us on this forum that they are drifting away from RS and seeking better rates elsewhere. Newbies will catch up. Lenders are an essential stakeholder in your business. It is important that you listen to what they are saying. I don't see what has happened to RS rates recently as any different to other similar P2P platforms that operate primarily in the consumer space. When credit worthy borrowers can go and get personal loans for less than we can currently earn in the RS rolling market it tells you something striking about the highly competitive marketplace out there right now. Maintaining high lender rates would only drive platforms to ever riskier consumer lending, something I personally do not want to see them do in the current eco/political climate. You have to view current consumer P2P in the wider market context and if you don't feel the rates on offer reflect your assessment of the risk then don't lend. Personally I am very very careful in investing in the high return 12%+ platforms on the basis that anyone willing to pay 18%+ for money has to be fairly desperate, likewise Z+ where some borrowers are paying 20%+ and you cannot even choose your borrowers does not fit my risk appetite. All companies need equity investment to survive various phase of their development, be that private money or more public investments like RS. Again RS is not doing anything unusual here that makes them any different to most of their peers and it is also reassuring that they are making some bold steps towards a more sustainable future.
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Post by p2plender on Sept 26, 2016 9:29:54 GMT
The rates actually dropped when Carnage (pointlessly) dropped rates post Brexit to keep the housing market/consumer spending plates spinning. Pre this I was often achieving 6.2% + for a very long stretch.
I don't see money leaving the 5yr market by the way, quite the opposite.
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Post by davee39 on Sept 26, 2016 10:07:00 GMT
Kevin, my understanding is that Woodford and Artemis are equity investors in your business and not lenders. So, it is possible for you to have a commitment to retail lenders while at the same time taking investment from institutional equity investors - which is what you have done. I am not in a position to know the internal workings of your company. However, I think you will find it hard to deny that it is in the interests of equity investors to see your profit margins at a maximum. One way of doing this is for you to borrow as cheaply as you can and to lend at the highest rates you can. Judging by the comments on this forum, many lenders feel that they are not getting the deal they once did and see a concerted downward pressure on lending rates. You may not care about this if you are attracting new lenders who are only too happy to get anything above the derisory rates offered on conventional deposit accounts. However, "newbies" in my view quickly get over this euphoria and become hardened by experience. Old hands in the meantime are telling us on this forum that they are drifting away from RS and seeking better rates elsewhere. Newbies will catch up. Lenders are an essential stakeholder in your business. It is important that you listen to what they are saying. There is much discussion about profit margins, money going into the back pocket etc. RS will not exist long term if it cannot ultimately generate a profit. Woodford has invested through a fund called 'Patient Capital' which is based on allowing businesses time to develop through early loss making stages. Without the investment who do you expect to cover the current losses? With banks paying nothing on deposits (Yorkshire pays 0.01% on an account I administer for a relative, with instruction not to move elsewhere) there is a wall of lender cash chasing yield. The problem is the Banks using free money to offer ultra cheap loans. Hot money will always move, not long ago money moved from Zopa to RS, now Zopa+ looks attractive for risk takers. As RS grows and becomes profitable any reduction in the risks of platform failure or provision fund failure will inevitably lead to lower rates on a safer looking platform.
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