QAA Secondary Market discount tracker (AC)

I think those wanting out desperate for cash are gone .... discounts will fall away unless investors have a better alternative

Shouldn't that have the opposite effect?

Antcipation of a restart to lending is most likely the driving factor in this "rally". Paying out excess cash ear marked for future lending will strip that possbility and risk would start increasing.

No new lending =
1. No end to lender fees in foreseeble future
2. A trend to concentration of toxic loans, the longer this goes on the more likely we'll have to use PF to pay interest to cover all bad loans with no new loan interest payments incoming.
3. Little to no top ups of the PF

All of these increase risk and will increase discounts. I still don't expect AC to be lending at any great rate until at least early Spring, but its clear lenders are antcipating it postively.

I am not sure how interests can be raised in this envioment to Lenders, not without new lending ironically. A BoE rate change is really the only way we'll see higher rates, its just not feasible for them to be higher along with PF contributions. (point 2)

Without coming across as too rude Alender (and my post isn't actually directed at you so much, just the on going debate here about cash payouts in general) "confidence would grow as investors would believe they are in accounts where there is a decent chance of access to their funds and not stuck in Hotel California accounts which would mean more money placed back in the accounts."

This comments suggests that all new investors are looking to exit. New money going into the accounts is not looking to exit, this doesn't make sense. New money is looking to invest in a range of loans which are not in run off, which are adding new loans to portfilio, paying old debt back and topping up the PF. Those are the only things which will drive the discounts or liquidity to PAR. Once new investors money outweighs the demands to fulfill new loans than withdrawals will be honoured (or if discount is low enough for anyone). I find it hard to argue against the longeivity of investors, over those who wish to exit now at the expense of the future of the whole portfilio. (by exit now, i mean 10% of your money back now, with the possbility of the other 90% suffering considerble capital loss as the whole thing comes crashing down)
No new loans would be nothing but a disaster, and we will be run off. Being locked in for 5+ years on some loans is not out of the question at that point.

2.4/2.1 is the current spread [14.00 17/12/20]

May well do, although i suspect a chunk may appear in other p2p platforms. And some in fscs safe places

I broadly agree with the rest of your post, I'm very very aware of the thin line AC are walking with not repaying loans directly to loan holders and instead withholding it for future loans. As somebody not looking to exit my ISA, that is clearly why my bias is hinged on health, rather than exit.