r00lish67
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Post by r00lish67 on Feb 8, 2018 9:34:35 GMT
Property Developers
Purpose: Secured property loans typically for property development (typically up to 65% Loan To Value)
Loan size: Up to £7.5m
Active loans: £83m
Interest rates: Typical borrower APR: 5.0% to 9.0%
Sources of loans: Direct to RateSetter and Brokers
Protection: Provision Fund provides “first-loss” buffer against credit losses. RateSetter has security against all properties
Expected Future Losses: Estimated based on the strength of the property development and Loan To Value. Does anyone know what the "first-loss" buffer actually is? What happens if the buffer is exceeded? I thought that whilst the PF was in place we had cover against all losses. If a property loan goes bad can we therefore lose capital notwithstanding that the PF has cash? If so, are we sufficiently diversified as I thought all money we invest goes into the first loan(s) available and is not spread (due to full cover from PF/pooling event if PF depleted)? As I see it from the above, they're just saying that the provision fund will take the hit (first loss) as and when property loans go bad. So, no, we wouldn't lose cash unless the PF was fully depleted, and diversification is a moot point with RS as you say.
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ashtondav
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Post by ashtondav on Feb 12, 2018 12:55:33 GMT
There's an error in today's cell.
Shouyld read 115%?
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ashtondav
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Post by ashtondav on Feb 13, 2018 11:41:32 GMT
Spreadsheet remains in error.
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cobi
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Post by cobi on Feb 13, 2018 17:10:53 GMT
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ashtondav
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Post by ashtondav on Feb 14, 2018 10:50:46 GMT
I guess that tells us which direction PF coverage is going, which is useful in itself I guess...
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jlend
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Post by jlend on Feb 14, 2018 14:56:21 GMT
Just FYI I asked RS about the coverage ratio about a month ago and this was their reply then. I will ask again in a couple of months.
"You’re right that the Interest Coverage Ratio has been outside of the target range of 125-150%. We are working to bring the Coverage Ratio back to within the target range as soon as is practical, and it has increased by several percentage points over the last few weeks. Risk pricing is the main lever we have to increase the Coverage Ratio and we use this prudently, within the constraints of a competitive lending market. 2017 and 2018 lending is expected to contribute positively to a higher Coverage Ratio."
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ashtondav
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Post by ashtondav on Feb 14, 2018 17:49:01 GMT
Just FYI I asked RS about the coverage ratio about a month ago. They update the PF page on the website more frequently than that. For example the latest cover they quote is 115% on 1st February. I guess they update it monthly.
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jlend
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Post by jlend on Feb 14, 2018 18:23:33 GMT
Just FYI I asked RS about the coverage ratio about a month ago. They update the PF page on the website more frequently than that. For example the latest cover they quote is 115% on 1st February. I guess they update it monthly. Yep I look at PF page regularly. I just like to get them.to provide some commentary on it
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ashtondav
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Post by ashtondav on Feb 20, 2018 10:05:15 GMT
If this is now dead in the water, can the thread be binned - or unpinned!
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jlend
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Post by jlend on Feb 20, 2018 10:12:40 GMT
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cobi
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Post by cobi on Feb 21, 2018 9:04:49 GMT
Thank you jlend . I have modified the sheet to use the statistics page.
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ashe
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Post by ashe on Feb 24, 2018 10:43:43 GMT
Slightly off-topic, but I like how on the new 'Provision Fund' page the example graphic representing a '4.6% loss' in a severe and sustained recession is somehow smaller in size than the 4.4% interest in normal conditions
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wapping35
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Post by wapping35 on Mar 23, 2018 8:20:36 GMT
FYI I just noticed RS has updated the Projected Provision Fund "surplus". Would love an explanation from RS, this seems to have changed over night. It's found on the Key Information/ Lending Performance page. i..e Projected PF deficit of £3.85m and PF usage ratio of 105.11% (if I recall it was around 96% yesterday and thus in surplus). W35
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Post by propman on Mar 23, 2018 9:08:34 GMT
Very worrying, although I have been estimating similar for a while now. The Coverage Ratios have not however been updated! The cash fund is similar to yesterday, but the defaults have increased significantly. Interestingly the 2 & 3+ payments late figures don't seem to have changed much despite the large increase in defaults.
- PM
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Post by RateSetter on Mar 23, 2018 9:38:21 GMT
We'd just like to put your minds at ease - there is a currently an error with the annual Provision Fund surplus/deficit statistics shown on our Data Hub webpage and we are in the process of fixing this.
The Coverage Ratio and Provision Fund statistics are displayed correctly on the same webpage, and are not affected by the afore mentioned error.
Thank you.
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