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Post by transo on Sept 2, 2015 18:41:50 GMT
Yep, I'm with grumpy crowd here; the nice graphs of FC's stats page (which they'll presumably be removing fairly soon) indicated I'm getting a better rate than about 92-95% of the people on FC (depending on exact levels of diversity criminality), and have been enjoying the usual August upswing in lending. Running a quick analysis they've basically taken their rates from the loan-value weighted average rates over the last year. I've pulled together a quick spreadsheet (attached) showing this. (I can't be bothered to do the analysis for D and E as I never bid on these, but feel free to fill it in.) I think the interesting this is that about 30% of all loans in the last year have an average rate higher than the fixed rate they'd get under the new scheme. I'm sure FC don't expect to suddenly find they don't fill 30% of loans, so they must be assuming a reasonable amount of cash that was being invested in higher rates will get invested at the lower rates. Unfortunately it won't be my cash as none of their rates meet my minima (at least until such time as the government actually makes losses tax deductible rather than just talking about it.)
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Post by transo on Sept 1, 2015 17:48:17 GMT
Not only 12078 but also it's other tranches, so that's £975k more available on the market, which I suspect FC think will fill Northants quite nicely. Glad I got in on the previous tranche with CB!
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Post by transo on Aug 27, 2015 10:59:43 GMT
And 4921 ... both with similar comments [...]So even if the new entities keep on repaying both loans on time, I am not allowed to sell them, and am stuck with them until 2019/2020 on a technicality. B******s to that, Frigging Crispbreads!!!!
It might be a technicality, but it is one that's fairly clear in their rules and seems entirely reasonable to me. Flipping relies on the market being "open" (i.e. the loan not being RBR) and there being a "greater fool" willing to buy. If you can't accept the risk that at some point one of those conditions will not be true you shouldn't be bidding on anything that you're not prepared to hold to maturity. To be fair, a few of my very early loans (2 and 3 digit loan numbers!) were downgraded because of a restructuring of the business and the original business being dissolved. In at least one case they didn't miss a single payment along the way, in another I think the only late payment was the one at the point they transitioned to the new company, which was a couple of days late. Of course I've got a couple where the guarantors have failed to pay and others where I'd be pleased if the repayment plan would complete by 2020 :-(
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Post by transo on Aug 17, 2015 22:03:47 GMT
From a well-known property website it looks like only 3 of the 7 flats are still for sale (and they're showing as "reserved" - if you believe these flags from estate agents). Can't find any evidence of successful sales of the other 4 having completed, but then the land registry details tend to take a while to filter through to the property websites.
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Post by transo on Aug 14, 2015 18:38:00 GMT
I think they probably think auto-bid will grab it's 65% or whatever now and they can get the rest from manual bidders, but they'll have to be generous ones. Although FC Asset Finance (or whatever it's called) will own the asset until the loan is paid off, that's not that much security as it's predicted to be worth <50% of the loan value up until the final year, and there's not much security in the rest of the company judging by their balance sheet. 9.5% for five years seems a poor return when FC are putting 10%+ on A-rated property loans with durations around a year, and often throwing cashback in. They (like lots of lenders) don't seem to understand yield curves; surely I'm not the only person expecting interest rates to be higher rather than lower in five years time!?
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Post by transo on Aug 5, 2015 13:14:04 GMT
(based on the 8% default rate assumed, and the new tax treatment of losses). It's worth noting that that's still "the proposed new tax treatment". Unless I missed it the budget didn't actually introduce the change (but confirmed they did intend to apply it to loans taken out this tax year, when it is introduced for the next tax year). There is a (hopefully small) risk that it won't be introduced, in which case any higher-rate tax payers in particular could get badly burned by defaults on Es.
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Funding Circle (FC)
Fees
Jul 23, 2015 22:13:59 GMT
Post by transo on Jul 23, 2015 22:13:59 GMT
I do not think they have any other way of doing it - other than a massive technical and presentational change by which the borrower pays FC a direct 1% and a lower interest rate to the lenders. This would have to apply to all the loans in the book on 6th April 2015. No practical difference to what is received, but huge disproportionate implications for the platform. It does seem that HMRC are wishing to be supportive and that the changes satisfy them. There really is no benefit in knocking it. We have always had to deduct 1% from the gross rate to get the net rate before tax - this has not changed. I think that's what worries me though: that FC appear literally just to have changed the text they put in the statements. The gross interest still flows into our "virtual cash" and the fee is then deducted from there. Zopa seem to have gone for much more root + branch changes (that they still haven't finished) and no longer show the fee. This implies to me they think it needs more than just a change of text to satisfy the HMRC regs.
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Funding Circle (FC)
Fees
Jul 23, 2015 10:11:34 GMT
Post by transo on Jul 23, 2015 10:11:34 GMT
So does anyone actually understand what the tax position is now? Will we pay it on gross interest earned (before deduction of the "servicing fee"), or just on the interest after that is deducted? Although Frumpy Carrots explained that they're changing it to take it directly from the repayments as far as I can tell all that's changed is that the entries on my statements now read "Servicing fee ..." rather than "Lender fee ...", which they read up until 14/04/2015. I still get the same sequence of three transactions per repayment (credit or principal repaid, credit of interest paid, deduction of fee), so the book-keeping appears to be the same.
I can't believe just changing the statement text satisfies HMRC so I'm currently pricing loans on the basis I'll be paying tax on the gross interest received, but that means I'm being priced out of the market even at the current elevated rates, except at short loan terms. FC's FAQs appear to be no help at all, so wondered what basis others were working on.
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Post by transo on Jun 11, 2015 16:39:29 GMT
Where is the D band or is C- being “rebranded”? Yep, C- is going to be re-labelled to "D" according to the post in the other place. Seems a very narrow band of gross rates, barely worth running an auction for. Not tempting until losses are tax relievable; after that possibly.
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Post by transo on Apr 10, 2015 7:21:42 GMT
My account shortfall has blossomed overnight from £2.12 to a disturbing £179.42. Hardy inspires confidence, but perhaps some of the missing funds will find their way home over the course of the day... Yep, my account seems to have gone down in value overnight; the reduction in loans outstanding amount looks a bit larger than repayments I get on a typical day, but available cash went up by less than this amount. No new comments on loans or transactions that could explain it... My accrued interest has also tumbled by a 3rd - hope that's not indicative of some re-evaluation of how likely some loans are to pay.
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Post by transo on Mar 28, 2015 13:59:53 GMT
Hmm... the excuse for the payment run failing in February (oh we didn't realise it has fewer days) was pretty thin, but not sure what excuse they're going to use for March... Looks like the payment run has fallen over; out of about 25 payments due today I've received one, the rest are showing as "scheduled". Not that there's anything to bid on with any repayments anyway!
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Post by transo on Feb 25, 2015 0:55:05 GMT
Indeed. And the 7th tranche of one of the rather dull 8% property development loans is still only 65% full with just 12 hours or so remaining. What will happen if it doesn't fill? Do Floundering Carelessly step in at the last moment and plump it up? Yes, Filling Cracks will probably step in and finish this one using FC Solutions Ltd. But they only have a £1M fund for this underwriting (net of sales on the SM) and so it is just possible that they might pull it and chop it in two rather than stump up. The borrower has to have the cash one way or another. Cash back is a promotion and so they cannot do it forever. They may have to improve interest rates to get these large multi-tranche loans filled - if they continue. In 2013 a secured A+ loan at 8% would have been gobbled up. Our expectations were raised in 2014 - speaking as a greedy b*st*rd. Apparently they didn't feel like filling it themselves, and are now "looking to re-negotiate with the borrowers to offer investors better terms"... I think it would help if FC discovered the yield curve, longer term loans should cost more. Seems nuts they're trying to get asset-secured loans lasting 36 months away at the same rate as property loans lasting 9 months or less. Even ignoring differences in security can't see that we should be bidding on loans lasting 3 years on the assumption other rates in the economy will be the same then.
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Post by transo on Jan 19, 2015 23:09:52 GMT
There's been lots of debate about whole loans, which I think it's safe to say aren't viewed with universal favour by people who frequent this board. I was pretty disgruntled when they were launched, and nothing FC have done since (in particular their failure to honour the commitment that the "table scraps" nature of loans offered and not taken up as whole loans would be made clear to lenders) has really convinced me otherwise, but I've had to live with it to get any lending done. However recently my platform provider sent me an e-mail about a new share offering by one of the investment trusts investing in P2P loans, P2P Global Investments plc. (Obviously the prospectus is a financial promotion so I'm not linking to it but you can find it online easily and then read it if you're eligible to do so.) I've had a reasonable skim through and thought board members might find a few points about P2PGI interesting: - They invest in loans on a variety of P2P platforms (FC, Zopa and RS in the UK, plus a mixture of US consumer and SME ones). They're limited to 33% of assets in any one P2P platform. They can also take equity stakes in the platforms, but that can't be a major part of their assets.
- Their "European SME loans" (which given the list above must all be FC) constitute 18.2% of the money they ~£180m they invested from their first fund raising early last year, so that's about £32m of whole loans or one third of the total. (Note I've used the loan book today and their figure dates from around November so aren't strictly comparable, one third may therefore be an underestimate).
- Their agreement with FC requires them to pay FC fees, but I can't see any declaration of what these are, or any way of working it out from the (limited) financials supplied. My guess is that these are similar to the fees we pay FC, but are probably at a lower basis, say 50bps (0.5%) rather than the 100bps that we pay, which might reflect reduced cost. The agreement is now on a three month rolling basis and requires them to lend certain (unspecified minimum volumes) with FC each period.
- Their "onboarding" requirements for new P2P platforms includes API access, so suspect they have API access to FC. (Again this is a bit irksome given FC's total failure to launch an API for the rest of us, despite how much this might save their struggling web servers, although I accept a whole loan API would be significantly simpler. I wonder if their agreement has the same ridiculous set of constraints about information obtained via the API as FC's proposed API agreement did last time round?).
- They're looking to raise another £200m by end of January, so that could be another several tens of millions heading for whole loans this year.
I also thought it might be interesting to compare the experience of lending directly via FC or in FC loans via P2PGI (assuming for a moment that it was 100% invested in FC loans, which as stated above it isn't, and can't be): - Direct bidders get control of the rates they bid at, whereas whole loan bidders get the moving average for the risk band take-it-or-leave it. It's likely that 'active' direct investors get better rates than P2PGI, auto-bidders presumably set a large part of what the "average" rate is at each risk band and therefore probably get similar rates to P2PGI.
- P2PGI (and other whole loan participants) get first-dibs on a random selection of loans (exact proportion seems to vary over time).
- It looks like P2PGI only invest in whole loans, although their investment authority allows them to take loan parts too (e.g. if they saw a loan that was never offered as a whole loan they liked the look of, there's nothing I can see to stop them bidding). If they do both they get a better selection of the market than we do (all partial loans plus a bunch of loans we never get an opportunity to see).
- Direct bidders can sell their loan parts, subject to liquidity in the secondary market, whereas whole loan holders are (as I understand it) generally stuck with them to maturity. (Although they may be able to arrange to sell on their interest in a loan without FC's involvement provided FC are happy to record the change in ownership.)
- Both direct and other bidders pay FC a fee, probably on a similar basis but possibly at a different rate.
- P2PGI's managers charge a fee of 1% of it's net assets (well actually 1/12% per month, which of course compounds to very slightly more than 1% a year). Note that its net assets will include uninvested cash etc (although an investment trust will typically place this on the money markets and earn some interest for the fund in the process, unlike direct investors' uninvested cash at FC).
- P2PGI's managers are also entitled to a "performance fee" of 15% of any increase in the net asset value above a previous high water mark. I use inverted commas as there appears to be no minimum performance they have to achieve to earn this, only that the net asset value increased in the period. If net returns after losses were (say) 5% they'd promptly take 0.75% as a performance fee, leaving investors with 4.25%.
- There are another bunch of fees involved in running an investment trust (depositories, auditors, ...) to fill up the 100 page prospectus with all the legalese. I've not bothered to add these up, but at other funds these often add up to ~0.1-0.2%/year.
All in all, looking at that, I feel a bit happier about investing with FC directly, and quite glad to leave the whole loans to people silly enough to pay "performance fees" for any non-negative performance at all. I would still like FC to be more honest and transparent about what's happening, and to allow us to use an API under sensible conditions.
What do others think?
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Post by transo on Jan 13, 2015 11:36:14 GMT
Hi mostlywrong. You need the amount of outstanding loans rather than total lent and that is on the statistics page. Then you need to subtract the amount lent by HMG and the BBB (which can be estimated but requires work) and then I think you should remove the whole loan lenders amount which would, as you say, require some work on the loan book using Excel (sum of outstanding amounts where number of loan parts = 1). We do not know the number of whole loan lenders but it will be negligible and so you could then divide by the number of lenders given (which I think is now lenders rather than those registered) and would get an average holding for partial loan lenders. Someone might feel like doing something like that. The distribution would be more useful, but impossible for us. From my last loan book download at the weekend I make it £381m of partial loans that we've all filled, vs £101m of whole loans. That's a surprisingly large amount of whole loans in the short(ish) time they've been going. Assuming that the number of whole loan investors is insignificant that would put the average per lender at £10.5k. It would be reasonable to deduct about 10% of this to allow for the portion the BBB has taken, so call it £9.5k. Looks like I'm well below average then
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Post by transo on Jan 12, 2015 17:46:15 GMT
Bit baffled today by auction 9974. It's rated as an A (over 36 months), and is due to repay a loan that the company took out last July, when it was rated C (over 60 months). No new financials are attached and the credit score has remained consistently abysmal (~15) over that time. No commentary to explain the increase in risk band, although someone has asked FC a question about it.
Anyone got any idea on how FC might have worked out that increase in risk band, or want to bet on the loan having to be withdrawn?
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