oldgrumpy
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Post by oldgrumpy on Aug 3, 2014 11:11:26 GMT
Well, accepting that they must be given some incentive I would think that 0.5% would be distinctly unimpressive. 1% on top of the full interest rates would seem reasonable, 2% too high. They often can't sell their units quickly, but there again, the more they flood the AM with, neither can we. I do think rates have dropped from the 10-12% ish to the 9-10% ish to allow this margin.
(cross posted with Chris)
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Post by chris on Aug 3, 2014 11:16:47 GMT
Rates have dropped to widen the pool of loans we can access and as our credit model has become more sophisticated. We have as much duty to fairness for the borrower as the lender. Underwriter margin doesn't come into it as far as I understand it.
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j
Member of DD Central
Penguins are very misunderstood!
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Post by j on Aug 3, 2014 11:46:19 GMT
Rates have dropped to widen the pool of loans we can access and as our credit model has become more sophisticated. We have as much duty to fairness for the borrower as the lender. Underwriter margin doesn't come into it as far as I understand it. Fully understood. But, loans in the region of say 12% or more have dropped dramatically, even with the fair explanation given above. Does it mean such rates/loans will be much rarer or, is it simply a question of % that as more lower rate loans are now coming through, the % of !2%+ loans is simply smaller?
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Post by chris on Aug 3, 2014 12:05:06 GMT
Rates have dropped to widen the pool of loans we can access and as our credit model has become more sophisticated. We have as much duty to fairness for the borrower as the lender. Underwriter margin doesn't come into it as far as I understand it. Fully understood. But, loans in the region of say 12% or more have dropped dramatically, even with the fair explanation given above. Does it mean such rates/loans will be much rarer or, is it simply a question of % that as more lower rate loans are now coming through, the % of !2%+ loans is simply smaller? Again probably a question for andrewholgate.
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merlin
Minor shareholder in Assetz and many other companies.
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Post by merlin on Aug 3, 2014 14:27:41 GMT
Rates have dropped to widen the pool of loans we can access and as our credit model has become more sophisticated. We have as much duty to fairness for the borrower as the lender. Underwriter margin doesn't come into it as far as I understand it. Chris, this is what I had feared was happening for some months. Your answer by implication IMHO, would also seem to imply that the lower level of interest rates would become the AC modus operandi for the future. Many of us who are higher rate tax payers are not going to like this and some including me will pick up our bats and play somewhere else. I for one have not invested any new cash with AC for some time but have already pushed a good sized five figure sum elsewhere, albeit leaving a similar sized sum currently paying well over 10% with AC.
A further test of my loyalty will be the final outcome of FF and one or two other current loans seemingly having difficulties of one nature or another. These I think will resolve some time in the future but their very existence does put a break on just how much I would be prepared to invest even if rates were to improve.
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Post by chris on Aug 3, 2014 15:37:49 GMT
Rates have dropped to widen the pool of loans we can access and as our credit model has become more sophisticated. We have as much duty to fairness for the borrower as the lender. Underwriter margin doesn't come into it as far as I understand it. Chris, this is what I had feared was happening for some months. Your answer by implication IMHO, would also seem to imply that the lower level of interest rates would become the AC modus operandi for the future. Many of us who are higher rate tax payers are not going to like this and some including me will pick up our bats and play somewhere else. I for one have not invested any new cash with AC for some time but have already pushed a good sized five figure sum elsewhere, albeit leaving a similar sized sum currently paying well over 10% with AC.
A further test of my loyalty will be the final outcome of FF and one or two other current loans seemingly having difficulties of one nature or another. These I think will resolve some time in the future but their very existence does put a break on just how much I would be prepared to invest even if rates were to improve.
Our internally discussed intention is to widen the spread of rates to incorporate more types of loan to a wider audience of borrowers. That will include some at higher rates than at present and some at lower. Market forces, both borrower and lender, will determine volumes and risks at each level. andrewholgate will no doubt give a more complete answer.
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Post by chris on Aug 3, 2014 18:04:39 GMT
To answer J's original question, I'm firmly of the opinion that over the next ten years "p2p" will become more like banks and banks will become more like p2p. In twenty years, it'll be difficult to tell them apart. ZOPA looks just like a trendy building society already these days. Underwriters will become more corporate and will start to call the shots and rates on AC (or they'll just buy AC out or set up competition). Underwriters will operate their own dark pool of liquidity that we won't be allowed in and consumer regulations will make it 'unsafe' for individual lenders to make their own lending decisions. Then underwriters will be the banks and we will be savers. That's not quite the vision we're aiming for, and some things in the revamp of the site will address that fear when viewed as part of the bigger picture.
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j
Member of DD Central
Penguins are very misunderstood!
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Post by j on Aug 3, 2014 19:44:54 GMT
That's not quite the vision we're aiming for, and some things in the revamp of the site will address that fear when viewed as part of the bigger picture. I'm sure this has been mentioned somewhere & I just missed it but, when is this revamp anticipated?
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Post by chris on Aug 3, 2014 19:48:47 GMT
That's not quite the vision we're aiming for, and some things in the revamp of the site will address that fear when viewed as part of the bigger picture. I'm sure this has been mentioned somewhere & I just missed it but, when is this revamp anticipated? It's not yet announced but I'm expecting it to be announced soon.
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j
Member of DD Central
Penguins are very misunderstood!
Posts: 2,188
Likes: 540
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Post by j on Aug 3, 2014 19:49:30 GMT
I'm sure this has been mentioned somewhere & I just missed it but, when is this revamp anticipated? It's not yet announced but I'm expecting it to be announced soon. Thanks
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Post by jevans4949 on Aug 3, 2014 21:00:38 GMT
The priority for a P2P investor should be to minimise risk by making small investments in as many loans as possible. I don't know how Zopa is working at the moment, but when they introduced the safeguard algorithm about a year ago one aim was to issue only £10 loan parts until the investor was into around 200 different loans, and then increase the size of the issued loan parts. This can be achieved in Zopa because (a) they have much bigger lender and borrower bases and (b) loan sizes are limited to £15k or £20k.
The average Assetz investor probably has a limit on the amount he is comfortable to invest in any one loan. From that point of view, it would be far better to have 10 propositions of £200K than one of £2M. Far better to invest £100 in 10 loans than £1000 in one loan; far safer to sit on the £900 until 9 more loans arrive.
The underwriters, God bless them, perform a useful function in that they have deep enough pockets to fund the remainder of the large loan that the average lender is wise not to commit to.
However, it is undoubtedly the case that everybody has become somewhat disillusioned by the long delays between the auction and drawdown especially when closed auctions revert to pre-bid status, and this is having a knock-on effect on how investors respond to the auction process.
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Post by Duane Dibley on Aug 3, 2014 21:24:17 GMT
I'm sure this has been mentioned somewhere & I just missed it but, when is this revamp anticipated? It's not yet announced but I'm expecting it to be announced soon. Is that the unofficial announcement of the official announcement? I can hardly wait for the official announcement of the official announcement.
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merlin
Minor shareholder in Assetz and many other companies.
Posts: 902
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Post by merlin on Aug 4, 2014 8:55:29 GMT
Rates have dropped to widen the pool of loans we can access and as our credit model has become more sophisticated. We have as much duty to fairness for the borrower as the lender. Underwriter margin doesn't come into it as far as I understand it. Chris, this is what I had feared was happening for some months. Your answer by implication IMHO, would also seem to imply that the lower level of interest rates would become the AC modus operandi for the future. Many of us who are higher rate tax payers are not going to like this and some including me will pick up our bats and play somewhere else. I for one have not invested any new cash with AC for some time but have already pushed a good sized five figure sum elsewhere, albeit leaving a similar sized sum currently paying well over 10% with AC.
A further test of my loyalty will be the final outcome of FF and one or two other current loans seemingly having difficulties of one nature or another. These I think will resolve some time in the future but their very existence does put a break on just how much I would be prepared to invest even if rates were to improve.
Following on from the above I was presently surprised to see two new offerings at 12% from SS appear in my email so guess where my went this morning?
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Post by chris on Aug 4, 2014 9:23:41 GMT
Following on from the above I was presently surprised to see two new offerings at 12% from SS appear in my email so guess where my went this morning? If that's what works for you then great. But SS have lent in total what we've lent in the last month and are operating in a different space. They're pawn brokers earning 30+% and passing on 12% to you, according to their parent company's website, which makes passing on that rate to you trivial. Those rates aren't viable in SME lending at the moment with the competition, relative risks of losses (remember we have a duty to be fair to borrowers as well), and the volumes of lending we're trying to achieve. In our pipeline we have a plan to have a steady stream of 12% pa loans but that's still got a way to go. Different lenders and borrowers have different requirements. RS seem to do just fine offering 6.5% downwards with no crowd DD or opportunity to manage your risk. We're settling into a level higher than that with plans to broaden the range of rates offered on our loans both up and down. And there will be niche players that offer higher amounts - if you trust SS and are happy with their offerings and number of loans they have then we're not the right site for you at this time.
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niceguy37
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Post by niceguy37 on Aug 4, 2014 9:51:56 GMT
agent69, you might be surprised how quickly surplus loan parts that are offered at a few pence discount are snapped up. Perhaps we could have an account setting so we could opt for an email alert if anything is put on the aftermarket at a discount (with a threshold set by the lender e.g. 0.25%). I think that would improve liquidity, as anyone needing to prepared to offer a small discount would have their offers quickly advertised.
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