New Loans (CP)

I got my remaining funds invested of about £130, but my request was much larger.

There were a couple of thousand investors in the loan, which is higher than others recently due to a couple of repayments, so it's natural that there would have been a low allocation.

Strangely, I noticed that the loan initially stated that it was fully funded by just 15 investors, with no allocation for me. This then updated shortly after. I've seen this before, but don't know what's going on behind the scenes.

Coupled with the auto-only status of today's loans it does look like there's an oversupply of funds again. A nice problem for them to have, and a testament to general sentiment in CP. They have a difficult balance to try to keep both retail and institutional investors happy. I think that they've managed this well for quite a while now, but that's the view of a retail investor. Perhaps they are needing to swing more towards institutional to keep them happy too, especially now that another is on-board.

I guess I'm happy to take a smaller allocation if that's what's needed to keep everyone involved. I think it's a big bonus for us that institutional funds are available to keep the platform going during times when us fickle retail investors dry up. A constant supply of diverse funding is a benefit to us all.

Have I been listening too closely to Mike? 😉

The second loan from today is now available again for top up funding - missed out on autoinvest

Well spotted. Yes, I have 2 screens displayed, one with the old rates and one with the new rates. They have all increased by between 0.2% and 1%.

CORRECTION: when I look under the "more" button, rates on some loans haven't increased. Perhaps they already had the new rates built in. They are all between 8% and 9%. I expect we'll get an email from CP tomorrow to announce the changes. I think that's how it happened last time. 

The list of upcoming loans is looking interesting. Rates range from 7.3% to 11%, with 6 loans scheduled for July 13th!

Email today. Rates increasing to 10% - 10.5% effective on tomorrow's loans.

The first 2 loans at the new rates are scheduled tomorrow. 

On the first, it seems that lenders will earn the full borrower rate of 10%. That leaves just a 1% arrangement fee for CP.

On the second, lenders get 10.2% of the borrower's rate of 10.5%. There's a 2% arrangement fee, minus a 1% introducer fee for CP plus the 0.3% spread. 

I can only assume that this is a big push for expansion on slim rates for CP. Presumably they will be increasing the rates to new borrowers for a bit more spread. Great news for lenders if CP can make it work. 

CP's spread was traditionally 2%; 10% borrower, 8% lender. The spread seemed to vary once they changed from those fixed rates, but still with around a 2% spread, sometimes more. 

During the last few rate rises the spread has been much less to start with, as the previously agreed borrower rates were honoured, but lender rates were raised. The spread then rose as CP charged the borrowers a higher rate for newly arranged loans; probably back to around a 2% average. 

I've seen arrangement fee of between 1% and 3.5% (I think I recall one at 5%, but can't remember which one). Some of that is often eaten up by an introducer fee, typically 1%. My gut feel is that the average arrangement fee is about 2% and average introducer fee is about 1%, but I haven't done any quantitative analysis on that. 

CP have generally taken the hit of a much lower rate when rates have been rising. There are often many later tranches where the borrower pays the originally agreed rate, but lenders get the new higher rate. I suppose we should try remember that in future if the opposite happens in a falling rate market.