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Post by GSV3MIaC on Oct 29, 2014 16:25:13 GMT
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Post by loanstar on Oct 29, 2014 21:21:11 GMT
I am certainly very pleased that FC have done this. Of course the question to ask is - should FC have placed this loan on the market in the first place.
Do we know of any other (non property) loan to have been taken down in this way?
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Post by GSV3MIaC on Oct 29, 2014 21:34:36 GMT
Earlier this year I believe there were one or two loans unfunded at auction end (which resulted in cashback on larger loans for a while), and back in prehistory some loans also failed to fund, but I don't think I know of any pulled before the close because they were not =going= to make it (pulled for errors, yes lots). Seems reasonable rather than dragging out the thing and tying up money for longer than necessary.
The two weeks for (large) property loans is, presumably, an attempt to give more autobid money time to pile up and get put in (from repayments on smaller portfolios) but in general I don't think it has the effect FC would like .. if something is going to fund, it'll fund in 7 days IMO .. actually it'll usually fund in 2 or 3 days, although the flippers will always pile in, bot-wise, in the last hour or two.
If I was bidding (which I wasn't on this one) I'd certainly wait until the last few hours, or 90% funded, or whatever, rather than leaping in on day 0, and having my money tied up, earning no interest, for 2-3 weeks. There is some faint benefit bidding early on auctions (LIFO in any one rate band, although picking the winner on day 0 when the bands are at 0.1% spacing requires Artificial Omniscience, rather than mere AI), but on fixed rate deals, the best deal is to be the last man/woman/bot over the line.
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sl75
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Post by sl75 on Oct 29, 2014 23:04:36 GMT
Earlier this year I believe there were one or two loans unfunded at auction end (which resulted in 2% cashback on larger loans for a while), and back in prehistory some loans also failed to fund, but I don't think I know of any pulled before the close because they were not =going= to make it (pulled for errors, yes lots). Seems reasonable rather than dragging out the thing and tying up money for longer than necessary. I'd be curious to know how FC could be certain that nobody was planning on stuffing the auction full of bids at the last minute. Don't recall any details of the loan - presumably it was the first of several tranches, so FC would have wanted to avoid a large funding gap on subsequent tranches even if this first tranche was unexpectedly funded by a flurry of late bids.
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Post by pepperpot on Oct 29, 2014 23:52:42 GMT
It was a 'commercial mortgage' loan rated A+ @8% for about 570k over 5yrs (I think, might have been 3) with 2% cb and was only just over 50% funded. No second tranches.
With several hundred K to find in less than 24hrs with so much else on the market it would have been a tall order to fill.
The last time the market was stretched like it is at the moment was a week or two before a £150k C- loan failed to fill in late March/early April triggering the 1% cb on loans over 75k. I think there's more flipper money floating around now than there was then, but the property loans are too sticky to attract it.
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blender
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Post by blender on Oct 30, 2014 9:04:08 GMT
I do not think that this loan would have been filled up on the last day with flipper cash. The loan period was too long, so that if the loan did not flip the money would not come back in a reasonable time and the 2% would be of diminishing value. There are better loans, so why bother? I was not even watching it progress.
It is good that FC have faced up to this and recognised that the lenders can leave a loan unfunded. It is healthier for the market, though obviously a disadvantage to FC's sales team. For FC to have bought it up and swamped the SM might have been a misuse. It is interesting that there is a current focus on the effectiveness of secondary markets in the ISA consultation, in that there is a need to allow transfer out between ISA suppliers and this requires the ability to sell on the FC SM at market value in a reasonable time. This is already a problem with the property loans and the 2% discount - they shift very slowly at par. The ISA wrapper should be a very important development to FC, more important than the need to fund every loan requested at the expense of clogging the SM. I hope that has influenced their decision in this case, and that they will not offer loans which are unlikely to be funded by lenders alone. None of us (presumably) wish to see loans left unfunded.
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sl75
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Post by sl75 on Oct 30, 2014 9:32:34 GMT
It is interesting that there is a current focus on the effectiveness of secondary markets in the ISA consultation, in that there is a need to allow transfer out between ISA suppliers and this requires the ability to sell on the FC SM at market value in a reasonable time. This is already a problem with the property loans and the 2% discount - they shift very slowly at par. ... but they sell very quickly at market value (broadly speaking, that involves passing on the 2% discount to the buyer for a "brand new" loan part that had a 2% discount in the primary market).
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Post by GSV3MIaC on Oct 30, 2014 9:33:50 GMT
Blender ..
The reason they are unfunded is that FC have limited the rate options (to fixed, in this case). Everything would be funded, at some rate, without this market fixing .. Of course the rates offered may be unacceptable to the borrower, but that's how a market works. Big C-s are going to go the same way, since 15% looks increasingly unattractive vs the other risk bands.
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blender
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Post by blender on Oct 30, 2014 10:02:21 GMT
It is interesting that there is a current focus on the effectiveness of secondary markets in the ISA consultation, in that there is a need to allow transfer out between ISA suppliers and this requires the ability to sell on the FC SM at market value in a reasonable time. This is already a problem with the property loans and the 2% discount - they shift very slowly at par. ... but they sell very quickly at market value (broadly speaking, that involves passing on the 2% discount to the buyer for a "brand new" loan part that had a 2% discount [you mean cash back, sl75?, - blender] in the primary market). Of course you are right SL75, within the limitations of the FC SM which is only open to registered lenders and has no market maker. The problem is that I am not sure that FC or the lenders with the loan parts (in some cases bought from FC Solutions on the SM without the cash back) would be happy to acknowledge that sale at the market value may involve up to 2% discount plus fee (maybe more initially if there is a rush into ISAs via portfolio liquidation). The cash back is supposed to be an inducement to purchase, not a compensation for purchasing something (a loan part, or entitlement to an income stream of taxable interest plus repayment) which is not competitively value for money. A can of worms there - but you are right. GSV, yes but the secured property market does not work like that. It is up to FC to agree in each case an interest rate etc which is attractive to lenders and they have, to their credit, acknowledged that at some cost to their marketing. They can no longer say that every property secured loan request so far has been funded, which is an uncertainty that nobody needs.
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mikeb
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Post by mikeb on Oct 30, 2014 18:59:32 GMT
... unfunded at auction end (which resulted in cashback on larger loans for a while) Your wish is granted .... 
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blender
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Post by blender on Oct 30, 2014 21:14:06 GMT
The question about lenders waiting till the end of the 14 days to bid applies mostly to the less attractive loans. The good ones go quickly. 8573 is at 90% of £360k and looks set to close tomorrow morning using less than four of the fourteen days allowed. OK £570k would take much longer, but it is the A+ 8% with 2% cashback over 14 months which does the job. Extend the term to 3 or 5 years and it becomes a dog - the offer that is, not the underlying development. It's the exit that is most important for the shorter term money needed to fill large loans.
I sense that FC may have to wind down the 2% cashback at some stage, or else it stops looking like a promotion.
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blender
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Post by blender on Nov 3, 2014 17:35:33 GMT
Reborn as two sequential loans for 50% of the total, A+ at 9% over 36 months with 2% cash back. 7 day auction.
A much better proposition.
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Post by GSV3MIaC on Nov 5, 2014 22:00:49 GMT
Anyone who wants some (I think I may have a little this time) better boogie, because it looks like it'll fill tomorrow maybe (assuming a certain number of last minute rushers). Yes, a somewhat better bet, if we allow as how the zero credit rating is not a real one.
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Post by pepperpot on Nov 11, 2014 11:31:29 GMT
Another oops. 8581
"This loan has been downgraded as it is due to be settled because of an error in the financials when the loan request was listed. The loan request will be re-listed in due course."
As this was a 1%'er it's now going to cost FC 2%, and as FC only make 1% P/A out of this 3yr loan (AFAIK, plus a bit from SM sales), it's effectively now a liability till the last 12 months. Oh dear.
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Post by GSV3MIaC on Nov 11, 2014 15:01:38 GMT
You missed their upfront fee of several %, direct from the borrower (although some may be shared with an 'introducer' I guess). The 1% running fee is just extra gravy to pay for the wonderful computer centre. 8>.
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