jhma
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Post by jhma on Dec 3, 2013 20:05:44 GMT
Title of email received today from FC.
The email includes a graph of "Average Gross Rates Acheived by Investors" (my underline
Average rates at 25 Nov shown as follows:
C- 12.6%...... with the line since 26 August never dropping below 12%
C 10.4%
B 9.4%
A 8.2%
A+ 6.6%
Now I haven't done any analysis but based on my memory I find this a bit optimistic - particularly the C- trend.
Is there an investor who has averaged 12% (or more) on C- since late August?
Admittedly recently the rates for some loans have been creeping up.
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oldgrumpy
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Post by oldgrumpy on Dec 3, 2013 20:19:57 GMT
jhma ...
Take a good look at this thread, which goes into exactly the same question. It all appears to be FC massaging the figures (to their advantage of course!) so that what the graph shows is not what you (or most sensible people) actually think it says.  I think the regulator will soon put a stop to that next year. forum.fundingcircle.com/showthread.php?9890-Weekly-Lending-Review-week-45 I notice that Becky (to whom the question was asked - and who does read this forum almost daily) does not actually reply. edit...I got the e-mail too!
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Post by mrclondon on Dec 3, 2013 20:25:21 GMT
I haven't received any emails from FC today so can't comment directly, but at face value this doesn't sound right. If you download the full loan book from the statistics page, then filter on credit grade to just select the C- loans, the vast majority over recent weeks have average rates of 11.5%. And even if FC are presenting capital weighted averages not numeric averages, I can't see how the answer could possibly be around 12%.
Edited: Thanks for the link oldgrumpy .... as I have said on other threads FC have long since lost my trust.
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jhma
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Post by jhma on Dec 3, 2013 21:11:14 GMT
Aha!
Thanks for the link, Old Grumpy.
A case of 'rediscovering the wheel' I fear.. How could I have forgotten that the 'gross yields' assume compounding with full (mythical) (re)investment.
I also had not realised that these graphs were being produced as routine by FC - first time I had looked at this type of display was when it landed in my in-tray. So - luckily - of no influence!
That's why a forum like this is of value to everyone!
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jimbo
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Post by jimbo on Dec 4, 2013 7:59:40 GMT
As an aside to the present discussion, call me a cynic, but if anything was ever intended to try to pull in more lender capital in the short term to attempt to pull rates back down, that email title looks to me like its embodiment. If this doesn't work and applications remain high, I'd anticipate a cashback offer coming up in the next six months. I expect a Christmas lull that is likely to result in a buildup of spare funds on the platform in the shorter term however, so I suspect rates will fall for a time in the New Year. If the recent growth in loan applications can be maintained and built on though, I'd expect another shot at higher rates coming up by around February/March.
We shall have to wait and see...
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pikestaff
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Post by pikestaff on Dec 4, 2013 9:01:58 GMT
Take a good look at this thread, which goes into exactly the same question. It all appears to be FC massaging the figures (to their advantage of course!) so that what the graph shows is not what you (or most sensible people) actually think it says. I think the regulator will soon put a stop to that next year. forum.fundingcircle.com/showthread.php?9890-Weekly-Lending-Review-week-45 ... There is an alternative point of view, which is that the rates stated on the loans (eg 11.5% on a C-) are not APRs, but should be. The regulator could insist that APRs were quoted, which in this case would be approximately (1+.115/12)^12 - 1 = 12.125%. This line of thinking also provides FC with a defence to the charge that they are assuming immediate reinvestment, They can argue that they are just reporting the APR on invested funds, which (they might say) is a perfectly reasonable thing for them to do. I'd have some sympathy with this if they were to explain clearly the basis of their numbers. One thing I do expect the regulator to object to is the quoting of rates before FC's 1% fee. Net of the fee, the minimum rate on a C- becomes 10.5% (APR approx 11.02%).
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merlin
Minor shareholder in Assetz and many other companies.
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Post by merlin on Dec 4, 2013 9:31:31 GMT
There is a further alternative point of the view and that is the historic one. If the current figures are compared with one year and two years ago would these figures look so good then? I doubt it!
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debeast
(o)(o)
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Post by debeast on Dec 5, 2013 11:22:24 GMT
Ah brilliant was going to come on here and ask the very question . Thats why i love this community  I think i'll keep me money where it is for now . but a nice cashback might have me back in for a bit . I don't trust FC anymore but i'm happy for them to give me free money |
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markr
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Post by markr on Dec 5, 2013 12:21:10 GMT
A minor point, but from our point of view as lenders wouldn't the percentages be AERs not APRs. Yes I know this changes nothing in the calculations or conclusions but no forum is complete without an injection of pedantry.
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I think the regulator will soon put a stop to that next year.
