Loans available at a discount (AC)

The Access Accounts' provision funds are said to be funded by the difference in the interest rate on the underlying loans and the interest rate that the access accounts pay to investors.

If that difference is negative, that specific loan's contribution to the provision fund is negative (non-invested cash's net contribution to the provision fund is even more negative - the access accounts pay full interest on non-invested cash held, but the cash itself makes a zero contribution at present[1]).

However, the handful of loans at low rates together with the non-invested cash are more than balanced out by loans at rather higher rates, so that even the 90DAA currently appears to have a net expected contribution to the PF equivalent to a bit more than 0.1% per month after interest is paid to investors but before any defaults are taken into account.

[1] For those who remember conditions prior to 2008, it used to be common practice for bank deposit accounts to pay interest, usually linked, directly or indirectly to a level a given number of % points below the BoE base rate, and P2P platforms were obliged by client money rules to pass this on to investors. If this becomes common practice again in the future, non-invested cash will likely make some contribution to the PF going forward.

#808  £,869.36 -1.0% discount

     £427,848.82 0.0% discount [14/03/19 18:00]

Amount 857,490 8% LTV 69.60% 9 of 15

#828    £6,430.98 -1.5% discount
        £127,794.85 -1.0% discount

       £347,327.19   0.0% discount [14/03/19 18:20]

Amount £1,544,008.62 8% LTV 63.95% 16 of 21