elliotn
Member of DD Central
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Post by elliotn on Nov 15, 2018 4:30:20 GMT
To further discuss oranges, LW would need to be taken against its PF and credit insurance so expected cohort losses may not impact lender returns unlike, say, a property sold for a capital loss at auction will.
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Post by stevefindlay on Nov 15, 2018 7:54:55 GMT
To further discuss oranges, LW would need to be taken against its PF and credit insurance so expected cohort losses may not impact lender returns unlike, say, a property sold for a capital loss at auction will. Yes - you would need to look at those in detail: - Credit insurance: a good idea for lenders. I couldn't find any data or terms of use: what it covers, when it pays out, what it's limits are, how much its been used to date etc. So it's tough to attribute any value to its existence in your risk analysis. - Provision fund: looking at older cohorts, the PF is being used up at a faster rate than it is being created (about 1.8x). So, the newer loans are propping up performance of older loans. This can only work if the platform continues to grow, or there are less defaults going forward. The total (actual cash) PF is about 1.5%, which is a fraction of the losses seen to date. So it's unclear how much protection you would get over a credit cycle. Again, I've got nothing against LW - we don't do consumer lending - I'm just trying to highlight the importance of scratching the surface and really understanding the shape of the risk that is delivering your net return. In terms of property being sold at a loss - our maximum LTV is 75%, and average is 56%. So an average default we need to be sold at 55% to see a loss: a house bought for £300k, would need to be sold for £165k or less. (The only losses we've had to date are against invoice discount finance, but are acceptable when looking at the higher rate of return and net outcome vs the risk).
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Post by dan1 on Nov 15, 2018 8:52:00 GMT
Tagging Matthew in case he is unaware of the discussion concerning LW. |
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Post by df on Nov 15, 2018 16:30:07 GMT
Thank you for your comments. To assist / chip in: (1) Deployment: as at this morning we were at 90.2% invested, with a further 4.5% committed (but not yet drawn) and have a good pipeline looking ahead. December is usually quiet for both loans and new investment, so we don't expect a big shift either way. (2) Return targets: we fully take on board the benefit of everyone getting the average rate of return (and thus share losses, which are at <0.2% pa, <0.4% total). This is in the works. A provision fund model exists in our bonds, at 2% (5x total losses). These yield 3.35% 1 year and 3.85% pa 3 year, and are ISA eligible. They won't make you rich, but can protect against inflation, and supplement a balanced portfolio. (3) Analysing net returns: When looking at net returns, it is really important to look at the risk: - Our net return has been 6% (after fees, cash drag, losses), with losses at 0.2% pa. 85-90% of loans are secured against UK property, with an average LTV of 56% (max 75%). - For comparison, as LW is mentioned above (no disrespect to them, we don't do consumer lending), their stats page shows c5% net return, depending on the year, with forecast losses for each cohort at c4-5% (vs c2% at present) So, if their loss ratio doubled, their net return would be 1-2% pa. If our loss ratio doubled, our net return would be +5.8%. If their loss ratio trebled, you would be losing c2-3% pa If our loss ratio trebled, your net return would be +5.6% Returns only mean something when you consider the risk (volatility and expected range of outcomes). Be careful when comparing only the net returns across different platforms - it can lead to comparing apples to oranges. Thank you stevefindlay for chipping in. It's helpful and good to know that there is a pipeline looking ahead... I was a little surprised to see that you are offering cash reward for referrals. Does it mean that you are expecting shortage of lenders' funds to accommodate forthcoming loans? I'm not a professional investor, so please forgive my ignorance, but LTV doesn't mean much to me anymore. I've invested in hundreds of loans secured on property and when it comes to recoveries vast majority of them don't sell at the value stated in VR's. I haven't been with LW for long enough to judge, but looking at posts in this forum - nobody has lost any money yet. Stats may say 5% net, but I'm getting my 6% so far. I guess 5% is an average - LW rates used to lower and there are two products (3 year product pays lower rate to lenders).
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Post by portlandbill on Apr 15, 2019 12:19:24 GMT
today's rate of return is down to 7.10%, and only 85% currently invested. Starting to get a little concerned again.
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Post by stevefindlay on Apr 15, 2019 21:09:51 GMT
today's rate of return is down to 7.10%, and only 85% currently invested. Starting to get a little concerned again. We're 93% invested across the platform today (same old story about ebbs and flows of allocations explains the discrepancy, and that is very close to being solved...). The average rates are coming down a bit though. We continue our trend of being conservative, and average LTV is also decreasing commensurately.
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TheDriver
Member of DD Central
Slightly bonkers
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Post by TheDriver on Apr 22, 2019 0:13:44 GMT
today's rate of return is down to 7.10%, and only 85% currently invested. Starting to get a little concerned again. Almost exactly my stats, with both figures continuing a gradual downward trend over the past 12 months. More concerning is that after 2 years my liquidatable value is still less than my original capital, at just under 97%! Allied to that, several of the Watch and Recovery items seem to have been there for some time so I'm still not confident to add additional funding; but it could have been a lot worse as I was being persuaded to go for an LC&F bond at the time!
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Post by df on Apr 22, 2019 1:11:20 GMT
today's rate of return is down to 7.10%, and only 85% currently invested. Starting to get a little concerned again. Almost exactly my stats, with both figures continuing a gradual downward trend over the past 12 months. More concerning is that after 2 years my liquidatable value is still less than my original capital, at just under 97%! Allied to that, several of the Watch and Recovery items seem to have been there for some time so I'm still not confident to add additional funding; but it could have been a lot worse as I was being persuaded to go for an LC&F bond at the time! I withdrew all available funds in Dec last year. Left with Watch&Recovery only, the value of this portfolio exceeds my total return. One repaid this week (hurray!), all other items are still there. Don't know what to expect in terms of time and value of returns (updates are very brief), except two Col loans - these are not likely to be repaid soon and very little chance for getting all capital back 
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Post by stevefindlay on Apr 22, 2019 8:40:31 GMT
To reiterate our definitions, and provide an indication of expected outcomes: Watchlist definition: The watchlist is an internal mechanism we have created which cover loans that have experienced a minor credit event such as a missed interest payment or the term being exceeded. Whilst these are minor, they are an event which shows the loan is not performing as expected. If the minor event is rectified (e.g. interest repayments are brought up to date) and there appears to be no other performance issues, we will take the loan off the watchlist and return it to live. Recovery definition: Loans in recovery are those where a major credit event has occurred such as the non-payment of the loan and a breakdown of communication with the lending partner. Specifically, the lending partner will begin proceedings to recover invested funds. They may do so by taking possession of and selling the security property. In most cases, watchlist and recovery loans repay in full, and with interest. This means you aren’t necessarily losing out on interest and returns, just because a loan has been classified on our watchlist. You may like to see this article covering the typical life of a loan on BondMason: www.bondmason.com/blog/life-loan-watchlist-recovery-and-defaults. Our past performance has shown that 50% of capital has been returned after 3 months of being on the watchlist/ recovery; and 75% of funds have been repaid within 6 months. Losses incurred since our inception amount to 0.13% of total lending. Our loss-given-default ratio currently stands at 1.8%. To illustrate, out of every £1 that goes on to the watchlist, we have recovered 99.8p. We believe our focus on property-backed lending can help reduce risk of loss. This is because lending partners take a charge over a property that can be sold in the event of default and funds can be recovered. Our property-backed lending is generally limited to smaller scale projects: refurbishments and reconfigurations rather than expansive developments; and the average LTV (actual sales prices, not anticipated gross development values) is currently 63%. To date, no client has lost fund through BondMason, we hope this continues. But your capital is at risk and we can’t guarantee that will always be the case. Nonetheless, we will continue to work hard for the benefit of all our clients. I hope this information is helpful, if you have any other queries please do not hesitate to contact us if you have questions about your specific account. |
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Post by jonrgrant on May 9, 2019 8:40:29 GMT
It would be interesting to know if other BM investors have the same issue of not being able to increase their invested, investment level. I’ve been with BM since end 2016, but never been able to increase my earning investment above 10k, I put money in, latest in April (11th) being 5k, it shows in the bank but does not get invested. After a month with none of the funds invested I then withdraw as zero return is worse than a bank-looks like another withdrawal next Monday!
target of 28 days for investment, does this ever happen as for me it’s zero invested after 30days, which is my experience of the last 2 years plus.
According to BM my current return is 5.6% was 5% a few weeks back, does anyone get 8% without withdrawing money from bank to maintain invested fund ratio ?
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Post by eascogo on May 9, 2019 13:21:38 GMT
It would be interesting to know if other BM investors have the same issue of not being able to increase their invested, investment level. I’ve been with BM since end 2016, but never been able to increase my earning investment above 10k, I put money in, latest in April (11th) being 5k, it shows in the bank but does not get invested. After a month with none of the funds invested I then withdraw as zero return is worse than a bank-looks like another withdrawal next Monday! target of 28 days for investment, does this ever happen as for me it’s zero invested after 30days, which is my experience of the last 2 years plus. According to BM my current return is 5.6% was 5% a few weeks back, does anyone get 8% without withdrawing money from bank to maintain invested fund ratio ? Here is an overview of my wife's investment for comparison. Today's rate of return is given as 7.29%. Note the near 100% capital investment for the period Aug2016 to March 2018. Wobbles from full investment begins in April 2018 and hovers around the 90% mark ever since. Far from being upset I take this as a sign of BM's cautious approach to investing our money. Your experience of none of your 5k being invested after 4 weeks is a bit concerning but it may well take up to 10 weeks to get close to full investment. Initially I would set the investment concentration at 2% to speed up the rate of investment.
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Post by stevefindlay on May 9, 2019 14:34:50 GMT
It would be interesting to know if other BM investors have the same issue of not being able to increase their invested, investment level. I’ve been with BM since end 2016, but never been able to increase my earning investment above 10k, I put money in, latest in April (11th) being 5k, it shows in the bank but does not get invested. After a month with none of the funds invested I then withdraw as zero return is worse than a bank-looks like another withdrawal next Monday! target of 28 days for investment, does this ever happen as for me it’s zero invested after 30days, which is my experience of the last 2 years plus. According to BM my current return is 5.6% was 5% a few weeks back, does anyone get 8% without withdrawing money from bank to maintain invested fund ratio ? - very happy to take a detailed look at your account for you, to make sure it is operating as it should. Please can you send a quick email to invest@bondmason.com ? Thanks, Steve
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Post by jonrgrant on May 9, 2019 15:31:17 GMT
It would be interesting to know if other BM investors have the same issue of not being able to increase their invested, investment level. I’ve been with BM since end 2016, but never been able to increase my earning investment above 10k, I put money in, latest in April (11th) being 5k, it shows in the bank but does not get invested. After a month with none of the funds invested I then withdraw as zero return is worse than a bank-looks like another withdrawal next Monday! target of 28 days for investment, does this ever happen as for me it’s zero invested after 30days, which is my experience of the last 2 years plus. According to BM my current return is 5.6% was 5% a few weeks back, does anyone get 8% without withdrawing money from bank to maintain invested fund ratio ? Here is an overview of my wife's investment for comparison. Today's rate of return is given as 7.29%. Note the near 100% capital investment for the period Aug2016 to March 2018. Wobbles from full investment begins in April 2018 and hovers around the 90% mark ever since. Far from being upset I take this as a sign of BM's cautious approach to investing our money. Your experience of none of your 5k being invested after 4 weeks is a bit concerning but it may well take up to 10 weeks to get close to full investment. Initially I would set the investment concentration at 2% to speed up the rate of investment.
Thanks, eascogo and good to know the process does work as your wife’s graph is showing what I would have expected / hoped would happen. I did contact BM before when this happened ie bank increases and investment decreases and was told it was due to large volumes of funds being deposited and was just short term. All I can conclude it’s my bad luck with BM, I will withdraw the 5k for now and try one last time in about 6 months time.
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IFISAcava
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Post by IFISAcava on May 29, 2019 12:49:18 GMT
Wow - Bond Mason winding down - no new investments.
Big news.
Sign of an impending storm more generally?
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zlb
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Post by zlb on May 29, 2019 12:55:29 GMT
Wow - Bond Mason winding down - no new investments. Big news. Sign of an impending storm more generally? Their USP was that they had access to non-P2P financial relationships, so it's worrying that they now only reference P2P sector in their explanation. I also wonder, winding down this product - the issues started as invoice discounting and their moving to property-secured lending as a result. They also had the other bond products in the ISA - the options for these don't show on my login now. It sounds as if the property-secured lending also became a problem. Is anyone in the ISA bonds, and are they included in "core"? edit: I can see that most on my recoveries list appears property related (bridge, mixed development, property, commercial bridging, etc). They are initiating a different product, so I imagine watch this space. I think that there is more that can be done to promote P2P as being a construct which bypasses banking as a positive thing, in order to attract better borrowers? (don't watch BBC dystopian years and years though - banks collapse and people loose their money as a regular part of the system, where the £85k protection really is all you get back).
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