littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Aug 21, 2020 15:37:05 GMT
The problem with LTV is that the L is fact and the V is at best someone's opinion, and is often pure fiction. Some platforms have never lost any investors money on paper because they keep kicking non-performing loans into the long grass. If someone has an asset with a realistic LTV of <50% I don't know why they have to pay a rate so high that p2p lenders can get >8% share of it. With respect your concept of what is a fair interest rate appears to be skewed by those afforded by AC. There are property bonds out there with debentures over the entire portfolio a company owns offering 15% interest with a loan to net asset value sub 40%. Viewed against those the BC interest rate looks weak. AC offered a product that ‘looked like’ and let’s face it , was used by the majority as a bank account. Whilst all the caveats were there; larger investors probably used it until better investments came along, smaller investors as an alternative to the likes of Marcus. It had a niche until liquidity was withdrawn and investors started looking at the underlying product. There is no such thing as a fair interest rate. It is set by the market which is almost entirely mainstream lenders - p2p is a minnow. I agree with your comments on AC, but why do borrowers go to BC instead of AC (as well as mainstream lenders) and pay a much higher rate, if the security is as good or better?
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iRobot
Member of DD Central
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Post by iRobot on Aug 21, 2020 15:52:10 GMT
For Investors who have funds queued to leave access accounts - if They had the option to invest @ 8% 180 days - maybe they would cancel their withdrawal request if They could divert funds to the new account. It’s carrot rather than stick incentivise me to stay voluntarily rather than trap me by not repaying my capital. Borrowers would fund the interest differential. The thing is presently there is a false market. Borrowers need Money so rates should increase however AC have intervened and prevent investors from getting a better return. I just don't see that happening. Existing borrowers are possibly (probably?) locked into a rate. New borrowers - viable new borrowers, that is - may be a scarce commodity at the moment and lenders may need to be super-competitive to get the business. (I have no inside track, so I don't know - but I wouldn't be surprised.)
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ian
Posts: 342
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Post by ian on Aug 21, 2020 15:58:22 GMT
With respect your concept of what is a fair interest rate appears to be skewed by those afforded by AC. There are property bonds out there with debentures over the entire portfolio a company owns offering 15% interest with a loan to net asset value sub 40%. Viewed against those the BC interest rate looks weak. AC offered a product that ‘looked like’ and let’s face it , was used by the majority as a bank account. Whilst all the caveats were there; larger investors probably used it until better investments came along, smaller investors as an alternative to the likes of Marcus. It had a niche until liquidity was withdrawn and investors started looking at the underlying product. There is no such thing as a fair interest rate. It is set by the market which is almost entirely mainstream lenders - p2p is a minnow. I agree with your comments on AC, but why do borrowers go to BC instead of AC (as well as mainstream lenders) and pay a much higher rate, if the security is as good or better? Maybe they are cheaper NET to borrow from. Why doesn’t everyone go to a bank ?
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ian
Posts: 342
Likes: 226
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Post by ian on Aug 21, 2020 16:02:16 GMT
For Investors who have funds queued to leave access accounts - if They had the option to invest @ 8% 180 days - maybe they would cancel their withdrawal request if They could divert funds to the new account. It’s carrot rather than stick incentivise me to stay voluntarily rather than trap me by not repaying my capital. Borrowers would fund the interest differential. The thing is presently there is a false market. Borrowers need Money so rates should increase however AC have intervened and prevent investors from getting a better return. I just don't see that happening. Existing borrowers are possibly (probably?) locked into a rate. New borrowers - viable new borrowers, that is - may be a scarce commodity at the moment and lenders may need to be super-competitive to get the business. (I have no inside track, so I don't know - but I wouldn't be surprised.) So borrowers are locked into a rate but investors have to reduce their return when the market dictates the opposite - this is why I believe ACs position is ultimately unsustainable- Ir goes against the market ! That said you add in government intervention (CBil / bounce back or Buy a Bentley fund) & the whole thing is crazy
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littleoldlady
Member of DD Central
Running down all platforms due to age
Posts: 3,045
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Post by littleoldlady on Aug 21, 2020 16:05:05 GMT
There is no such thing as a fair interest rate. It is set by the market which is almost entirely mainstream lenders - p2p is a minnow. I agree with your comments on AC, but why do borrowers go to BC instead of AC (as well as mainstream lenders) and pay a much higher rate, if the security is as good or better? Maybe they are cheaper NET to borrow from. Why doesn’t everyone go to a bank ? Usually because the bank won't lend them enough. Speed of acceptance can be a factor, but not enough to pay that much extra for. If the rate is higher the risk is also going to be higher.
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ian
Posts: 342
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Post by ian on Aug 21, 2020 21:47:05 GMT
Maybe they are cheaper NET to borrow from. Why doesn’t everyone go to a bank ? Usually because the bank won't lend them enough. Speed of acceptance can be a factor, but not enough to pay that much extra for. If the rate is higher the risk is also going to be higher. It was a rhetorical question ... the bottom lime is there are a whole suite of answers - Example if I am flipping a site and making 50% paying and an annual rate of 20% for 3 months with no fees / redemption penalties that quick deal might be the most cost effective.
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