spockie
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Post by spockie on Jul 25, 2014 14:46:22 GMT
6 months, 5% fee.
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j
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Post by j on Jul 25, 2014 15:00:52 GMT
One is starting to get the feeling that there's a theme developing here. Maybe we should start calling ourselves the 10%ters club on account of the majority of the last few loans all being @ 10%
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j
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Post by j on Jul 25, 2014 17:45:34 GMT
Having read the initial outline of this loan, I actually like it. The only downside is the rate but, that is comparable with what's been on offer lately on AC. If the interest is high, I may put a small bid in to reserve a stake & await the AM to increase the holding
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kermie
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Post by kermie on Jul 25, 2014 21:46:47 GMT
Having read the initial outline of this loan, I actually like it. The only downside is the rate but, that is comparable with what's been on offer lately on AC. If the interest is high, I may put a small bid in to reserve a stake & await the AM to increase the holding I tend to agree - I quite like these development loans (which are gradually drawn down) with relatively low LTV. Would just be nice to see it back up at 12%, but for this loan at max 60%, I think the rate is pretty reasonable. I find it is worth remembering that only a portion of your cash is actually at risk (due to gradual draw down) - but it's still earning the full rate for the life of the loan.
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spockie
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Post by spockie on Jul 25, 2014 21:54:42 GMT
It feels as if it has become a bit chicken and egg. AC have dropped rates in anticipation of needing to make more use of underwriters; however, on relatively small loans like these, if they nudged the rates back up to where they were, they would fill very quickly and no underwriters would be needed.
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Post by Ton ⓉⓞⓃ on Jul 25, 2014 21:57:28 GMT
I think the 250k is about right, I can't understand where the higher valuations come from on the little details we have. (Looking at google maps even 250k looks generous, but I'm no expert.)
I think there's ample room and reason for the loan to be 'extended'.
It's interesting having the original designer also give us monthly valuations.
I see 'Z' has asked a questioned about what will happen if the ltv covenant is breached (Q&A). It'll be useful for other similar deals. I'm guessing it's a tool similar to PG's.
I'm intrigued as to who will be paid the first 72k considering the Borrower has born all the costs to date.
Having just re-read what I've written I see these are ramblings of someone who should be sleeping.
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mikes1531
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Post by mikes1531 on Jul 25, 2014 22:10:17 GMT
I'm intrigued as to who will be paid the first 72k considering the Borrower has born all the costs to date. The borrower may have invoices from builders -- for this or other projects -- that need paying. Or maybe they've run up their overdraft to cover their costs so far and they'd like to get that paid off since it could well be at a higher rate than 10%.
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kermie
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Post by kermie on Jul 25, 2014 22:26:53 GMT
It feels as if it has become a bit chicken and egg. AC have dropped rates in anticipation of needing to make more use of underwriters; however, on relatively small loans like these, if they nudged the rates back up to where they were, they would fill very quickly and no underwriters would be needed. Seems like that to me too (either that, or platform competition is hotting up, squeezing rates down? You'll notice SS is very quiet - I suspect due to them feeling the heat of competition - so far all their loans are at a lender rate of 12% across the board, but I suspect that is proving tough keep doing). Is there a way of breaking the deadlock on AC? Maybe AC should try an experiment with a 12% loan and no immediate underwriting, and see how it fills at preview stage? I daren't mention cash-back incentives :-) The underwriters seem to have very deep pockets. I understand it's commercially sensitive, but I'd be very interested to hear how the underwriter deals are structured. You may also find that AC have made a strategic decision that in order to grow fast enough to meet their targets, they simply can't get away from underwriting. I recall that on a couple of loans, it has been suggested that guaranteed underwriting is a major reason for them choosing AC over other p2p platforms. In that regard, it helps AC be much more mainstream.
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spockie
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Post by spockie on Jul 25, 2014 22:32:30 GMT
I agree with you, kermie on the medium and large loans, but ones up to 300K would fill easily if the rate were attractive. When they can't fill a 100K loan without recourse to underwriting, you can't help but feel they've got the rate wrong as experienced investors don't feel the rate matches the risk. i also lend with SS and there is certainly a drought there. Let's hope it's seasonal... |
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mikes1531
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Post by mikes1531 on Jul 26, 2014 1:24:11 GMT
I recall that on a couple of loans, it has been suggested that guaranteed underwriting is a major reason for them choosing AC over other p2p platforms. In that regard, it helps AC be much more mainstream. Presuming AC know what their underwriters will support and what they won't, there's nothing to stop AC from promising borrowers that a loan will be underwritten if necessary, and still trying to fund the loan without engaging the underwriters. I suspect that's why so many auctions start without any visible underwriting -- AC are hoping they won't need to call in the underwriters -- and the underwriting appears at the last minute if it's needed.
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Post by yorkshireman on Jul 27, 2014 15:10:28 GMT
What is being offered as security? On the loan page we have “First legal charge over the site with loan in personal name” yet on the credit report we have “First legal charge over garage at **************** loan to gross development value of 60%"
When I read garage as security I assumed that it referred to a fuel station or workshop, however, according to Zoopla the property at the postcode quoted for security is a flat with shared freehold consisting of 2 bedrooms, 1 bathroom and 1 reception and no mention of a garage although I stand to be corrected as I was unable to access the full details of the flat.
This isn’t a flippant question but is the security offered the garage of the flat rather than a fuel station or workshop, (I appreciate that London property prices are in cloud cuckoo land but it would be ridiculous to offer it as security IMO), an error, or someone taking the mick?
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Post by whitmanthecat on Jul 27, 2014 16:16:13 GMT
What is being offered as security? On the loan page we have “First legal charge over the site with loan in personal name” yet on the credit report we have “First legal charge over garage at **************** loan to gross development value of 60%"
When I read garage as security I assumed that it referred to a fuel station or workshop, however, according to Zoopla the property at the postcode quoted for security is a flat with shared freehold consisting of 2 bedrooms, 1 bathroom and 1 reception and no mention of a garage although I stand to be corrected as I was unable to access the full details of the flat.
This isn’t a flippant question but is the security offered the garage of the flat rather than a fuel station or workshop, (I appreciate that London property prices are in cloud cuckoo land but it would be ridiculous to offer it as security IMO), an error, or someone taking the mick?
It's a garage as in the building I keep my car in, or where most other people keep their junk. The address given on the credit report covers what is a semi-detached house (possinly converted to flats) with an adjacent garage. The plan is to replace the garage with a tiddly narrow 1 bed house,slotted in between the existing house and the substation. The details can be found on Haringey's planning website.
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j
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Penguins are very misunderstood!
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Post by j on Jul 27, 2014 17:30:14 GMT
Seems like that to me too (either that, or platform competition is hotting up, squeezing rates down? You'll notice SS is very quiet - I suspect due to them feeling the heat of competition - so far all their loans are at a lender rate of 12% across the board, but I suspect that is proving tough keep doing).
My understanding is that SS is an arm of Lendy Ltd who arrange all the loans & pre-underwrite them at rates fairly higher than the 12% we get offered. They then sell them to us @ 12% in order to free up their funds to use to underwrite more loans, and so on. Whilst competition surely will have an effect on their rates, I think the markets they operate in (marine mainly, before recently getting into property) have a somewhat different dynamic & they have more experience in these specialised areas & their margins will currently be under less threat than we probably think until more players enter on a much bigger scale. One example is the boats auction on AC where you can see possible problems developing in the security in the sense that the assets can sail away into the sun compared to being secured in a marina (imho) which gives me the jitters & makes me very reluctant to invest in this loan until I feel the security is somehow tied down in some shape or form.
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mikes1531
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Post by mikes1531 on Jul 27, 2014 18:31:01 GMT
Seems like that to me too (either that, or platform competition is hotting up, squeezing rates down? You'll notice SS is very quiet - I suspect due to them feeling the heat of competition - so far all their loans are at a lender rate of 12% across the board, but I suspect that is proving tough keep doing). mainly, before recently getting into property) have a somewhat different dynamic & they have more experience in these specialised areas & their margins will currently be under less threat than we probably think until more players enter on a much bigger scale. One example is the boats auction on AC where you can see possible problems developing in the security in the sense that the assets can sail away into the sun compared to being secured in a marina (imho) which gives me the jitters & makes me very reluctant to invest in this loan until I feel the security is somehow tied down in some shape or form. (I think I've fixed the above so that the quotes are attributed to the right people.) While I agree that Lendy make the boat loans at much higher rates to the borrowers than 12%, I suspect that doesn't apply to their property bridging loans. The boat lending effectively is a pawnbroking arrangement. There are significant costs involved in arranging the safekeeping of the security, and the loans can be paid off at any time without penalty. SS/Lendy have a big enough margin that they can afford to continue to pay investors 12%, and the options for boat owners wanting a short-term loan probably are quite limited. So I suspect that side of the business is fine except for the shortage of people wanting loans. The property bridging loans are in a lot more competitive market. I don't expect that Lendy can charge the sort of APRs they can for the boat loans, so their margin would be a lot smaller -- but they also don't have a problem with storing the security. And that's not to say that the margins available aren't enough to support a 12% rate to investors. On one of the currently available AC loans, the borrower seems to be paying 15.6% interest. (Investors will be getting 10%.) I hope that SS can continue to offer its investors 12% on all loans, but only time will tell. If they can do that, and if they can develop a wider selection of loans available at any one time, then I think that would put pressure on AC's investor-attracting side.
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j
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Penguins are very misunderstood!
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Post by j on Jul 27, 2014 19:09:17 GMT
mikes1531, 15.6% vs 10% is quite a big margin for AC! I take it you worked it out from the final fees paid bit on the repayments section? If that is the case, you can see why members are trying to push for some regular cash back on individual loans to reduce the need for underwriting. I still cannot understand why this is not a regular feature. The result is less underwriting, more normal lender input which equates to happier & more interactive members. AC will most probably still make the same margin, if not more, as when relying on underwriters!
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