Steerpike
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Post by Steerpike on Jan 2, 2018 9:47:18 GMT
Many voices have mourned the passing of higher rates on AC and now many voices are rejecting the proposal to bring them back, not sure if these are the same voices.
Anyway, I already invest in higher risk/rate, including second charge, loans on other platforms and so at least superficially this seems to be a reasonable proposal by AC.
However, second charges require much closer inspection and so will be quite different from most options on AC.
Some AC specific risks seem to be that trusting AC investors, used to the relative safety of AC, invest without appreciating the added risk, and GBBA et al soak up all the first charge but the second charge doesn't fill thus delaying drawdown.
One way of keeping tranche 1 and tranche 2 aims more aligned might be to repay all capital before paying any (accrued) interest, for AC this might mean the PFs picking up T1 accrued interest so that T2 capital loss is reduced.
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Post by jevans4949 on Jan 2, 2018 10:50:26 GMT
... it is only intended that the higher return tranches are available to those who understand this structure - this higher LTV tranches is not intended for mass market in our view ... : Should we infer from this that access to these products will be restricted in some way? How?
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dermot
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Post by dermot on Jan 2, 2018 12:12:53 GMT
Interesting proposal.
I have a mid 5 figures investment in AC, around 2/3 of which is in GBBA/GEIA with the rest split ore or less equally in MLIA and PSA - and a few £K in QAA mostly to service occasional larger credit cards bills. I probably have a higher proportion in managed accounts than many investors, but I'm retiring and getting lazy. Also, I'm active on a number of other P2P platforms and don't want to soak up too much of my time managing investments.
I've been partially running down the PSA in favour of GBBA2, and have not made any new investment in MLIA for quite some time, due to the lower rates. As GBBA1 slowly repays, I'll be looking for a new home for that cash - your new proposal would likely take some of that, but given the low rates on MLIA and concerns (below) about MLIA valuations, will otherwise leve the platform for greener pastures.
So, yes I'm interested in the new approach, but wondered if you'd like to know where that cash would come from.
I would probably adopt 75% packaged accounts, 25% higher risk tranche loans for any given opportunity. Mostly funded by natural run down of GBBA1 and a bit more manual rundown of PSA (in which I think I have a bit too much). Possibly a bit from GBBA2 as well.
BUT, before dipping toes in with any *fresh* cash, I think I would need to see more convincing attention to the quality of valuations - just tacking RICS on the back of one's name does not, in any meaningful way, confer credibility to the valuation. This is, of course, a sentiment directed at all of the P2P industry, not just AC.
Not sure when the long-awaited IT upgrade is due, but the current host of problems (overinvestment beyond 20% in GBBA loans, things freezing up, GBBA2 completely unavailable for certain accounts (like my wife's...) and almost continuous timeouts when moving cash between accounts...) don't make me feel particularly comfortable with the inner workings at the moment. I'd hope you fix that lot before adding another layer of complexity.
EDIT - GBBA2 problem fixed as of a few minutes ago, tnx.
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Post by crabbyoldgit on Jan 2, 2018 13:00:48 GMT
not for me thanks , one would think the higher rate return loan parts would not be in the black box accounts , the effective ltv being too high. So in the case of a default vote the majority would be in the the lower interest tranch with no interest but in a fast fire sell return of capital and interest. Also i can not see any interest in a protracted campain from AC in pursueing the last dregs of a recovery once the pf protected accounts have been repayed in full.
Any increase in returns at one end must result in lower returns at the other, all be it at lower risk due to the better ltv and returns are getting low enough for me. The KISS method works for me , cleaver things in my experiance nearly always turn out to have been a dumb idea in the end. What i want from AC is more good loans at 8 to 9 % , backed by an excellent recovery team. Would be nice to see a shot across the bows of the rics valuation professionals, which appear to little more than a scam, during 2018, which may make them a bit more careful. We will see, on the the whole AC are doing a reasonable job, it aint bust , dont fix it.
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ton27
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Post by ton27 on Jan 2, 2018 13:05:58 GMT
Not for me either - the rates on the risky tranches are just too low. Whether or not this is introduced will not change the fact that I am running down my lending on AC due to the continuing decrease in rates.
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Post by Deleted on Jan 2, 2018 16:14:54 GMT
I see it like this
The borrowers borrow at a rate
The lenders lend at a rate
AC make their cut from the difference
AC are offering to use some of that money to make a more complicated loan system on top of their existing "diverse mix" of offerings.
I suggest AC take the money that would be used in the development of this additional complication and give it to the lenders or the borrowers
The idea seems to offer nothing
The lenders are not happy with the present loan rates
I know you guys are trying to get busy for the rush up to IPO but I suggest you might do better by
1) simplifying what you do or....
2) stick to your strategies (such as develop a "green market") or....
3) improve loan rates or......
4) improve borrower rates
There is someone in your board who likes tinkering with fancy new ideas, I suggest you get rid of him and focus on your knitting.
I remember when a bank was a bank, then they tried being an estate agency, then an insurance company ......... please don't go the way of the dinasaurs.
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Post by stuartassetzcapital on Jan 3, 2018 12:38:33 GMT
Thanks everyone for useful and varied feedback. We shall take it all on board in our further considerations.
Just to clarify, there is no change planned to our current investment offering. This poll was published in response to requests from many of you for a higher gross return product and is just one possible component of that solution for those users.
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