Liz
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Post by Liz on Oct 21, 2016 18:39:49 GMT
Straight into the pipeline and go-live email - on an £8m loan? Wow. I appreciate there's a need to move fast on some loans, but I really hope the behind-the-scenes has all been done properly. That'd hurt if it went pear-shaped. I'm guessing everyone will get what they want with this one  Do I still need to pre-fund 10X what I want, like the old daze!!! 
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elliotn
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Post by elliotn on Oct 22, 2016 16:08:41 GMT
I'm guessing everyone will get what they want with this one Do I still need to pre-fund 10X what I want, like the old daze!!! No! I ended up with 11k last week. And I'm a SH 
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Post by supernumerary on Oct 26, 2016 8:03:32 GMT
With a loan of this size it probably needs to be 12%. I suspect that the first loan we see with a lower interest rate will be small and with objectively good security (maybe residential) to get the ball rolling. SS know that this will still easily fill at 11% or maybe even 10%. Then as they get more experience with lower rate loans and lender's expectations have been managed lower, they will start to extend the lower rates to larger and less secure loans. I remember reading your comments about PBL143, needing the 12%, then mentally noting your prediction about 'lowering lenders expectations'...  The first loan at the lower rate is 9%. COULD THIS BE to manage 'lenders expectations', so that a larger loan (similar to PBL143) goes on at 11%? I am interested in your thoughts now, as developments have unfolded... 
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Post by Butch Cassidy on Oct 26, 2016 8:28:42 GMT
With a loan of this size it probably needs to be 12%. I suspect that the first loan we see with a lower interest rate will be small and with objectively good security (maybe residential) to get the ball rolling. SS know that this will still easily fill at 11% or maybe even 10%. Then as they get more experience with lower rate loans and lender's expectations have been managed lower, they will start to extend the lower rates to larger and less secure loans. I remember reading your comments about PBL143, needing the 12%, then mentally noting your prediction about 'lowering lenders expectations'... The first loan at the lower rate is 9%. COULD THIS BE to manage 'lenders expectations', so that a larger loan (similar to PBL143) goes on at 11%? I am interested in your thoughts now, as developments have unfolded... I think SS have finally given in to the temptation of pricing for liquidity not simply risk, following the same slippery slope that FC, Bondora & AC have already taken. Why give investors 12% if the same loan would successfully issue at 9%? Obviously this means 3% extra margin to either bolster SS margins or give borrower's a lower rate (which will help drive volumes - the holy grail of fast growing, ambitious platforms) or a combination of both.
Others have already pointed out that the "one rate fits all policy" was a flawed business model, as clearly risk levels would vary between different schemes. Whilst I believe that return should match the risk, the problem investors face, in an otherwise low rate environment, is that demand far outweighs supply (or at least the amount of supply established platforms can bring to the market) so typically the return will be pushed downwards to IMHO below the level of risk that the typical loan represents. Now responsible platforms should protect investors from this market pricing by applying an appropriate rate to each loan from their own DD & yield/default modelling; a great example of this is MoneyThing but then again does anyone actually believe FC has not seen grade inflation recently?
For what it is worth I like SS & believe that they run a decent platform & most rates do actually match the risk levels but the real test will be to see whether this continues - I am willing to let SS prove themselves & hope that they follow the MT route but am always minded of BUYER BEWARE having seen the actions of other platforms work in their own interests & directly against those of investors.
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Post by supernumerary on Oct 26, 2016 16:54:01 GMT
Others have already pointed out that the "one rate fits all policy" was a flawed business model, as clearly risk levels would vary between different schemes. I am intrigued by that statement, as I thought Saving Stream had done well up to now, rather than a 'flawed business model'... As hor1997 wrote previously; I think SS success is down to the simplicity of its product, besides the good rates. In fact the rates were/are good but actually have been bettered by FS for months, specially now with all added bonuses. Once you start distinguishing loans you introduce a layer of additional difficulty, which might not be suitable to everyone. But for me it is still acceptable if this really brings a lot more business. Of course to be fair, also SS should cut their share of the pie... I will continue to analyse loans and borrowers individually. But clearly a 13% fair FS loan (and there are many) will get my money far easier than a 10% excellent SS loan. So, I am not conviced that the numbers will match at the end the SS predictions... The process should be made very slow and gradual.
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averageguy
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Post by averageguy on Oct 26, 2016 18:41:50 GMT
I anticipated a lower rate on maybe loans that were at say 50% of a valuation...not at 70% ...a tad disappointed at this first 'offering'
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sam i am
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Post by sam i am on Oct 26, 2016 21:01:36 GMT
With a loan of this size it probably needs to be 12%. I suspect that the first loan we see with a lower interest rate will be small and with objectively good security (maybe residential) to get the ball rolling. SS know that this will still easily fill at 11% or maybe even 10%. Then as they get more experience with lower rate loans and lender's expectations have been managed lower, they will start to extend the lower rates to larger and less secure loans. I remember reading your comments about PBL143, needing the 12%, then mentally noting your prediction about 'lowering lenders expectations'... The first loan at the lower rate is 9%. COULD THIS BE to manage 'lenders expectations', so that a larger loan (similar to PBL143) goes on at 11%? I am interested in your thoughts now, as developments have unfolded... I must admit that PBL144 came in with a lower interest rate than I had expected. I thought SS would have gone for 10% (ie kept it in double figures) but they have been more aggressive. It's a small loan and I'm sure it will still fill. Even in the very unlikely event it doesn't, SS could probably cover it from their own capital. What will be most important to SS is the level of pre-funding compared with other similar loans at 12% (PBL086 and PBL134 come to mind) so they can judge demand. This will be a very good test for them. I do wonder if the move to bottom-up funding for all loans was part of this. While not perfect, it is a much better proxy for demand than the gaming that went on with proportional funding. SS is a business and they exist to make profit. To state the obvious, there are two main ways they can do this: - increase sales volumes - increase margin (interest rate and fees paid by borrowers less interest paid to lenders and other costs) [Noting that you can of course decrease one of these if the increase in the other more than outweighs it] I'm sure SS is looking to increase both. The reduction in interest rates to selected borrowers should increase sales volume and if the reduction is more than matched by the lower rate paid to lenders then the margin will increase. SS know that in many cases, in particular the small loans and the lower risk loans, demand from lenders far exceeds supply from borrowers. They can reduce the interest to lenders even if the interest paid by borrowers remains the same. Any profit maximising firm would want to bring supply and demand more into line. Maybe around a year ago when the subject of lower interest rates was previously discussed, SS clearly said that they would not reduce interest rates at that time. They wanted to keep rates at 12% to ensure that they could significantly grow the business and ensure that there was enough lender support to do so. Since that time SS has matured as a business and is now entering a new phase. The probably believe that they have enough scale to be sustainable and they can now focus as much on profit growth as sales growth. So where now? SS will be in a testing phase. They will gradually introduce more loans at a lower rate and analyse supply and demand. I guess for the time being, to be safe, they will want to keep demand from lenders to be significantly above supply to ensure that loans are still easily filled, but with experience they will move closer to the balance point. That means gradually introducing lower rates for progressively larger and riskier loans in a way that realigns lenders' expectations but doesn't scare them off. I might be wide of the mark, but that would be my approach to the business.
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twoheads
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Programming
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Post by twoheads on Oct 26, 2016 21:17:31 GMT
I agree that this looks like a test case for SS. Nice small loan... test the waters... they can easily cover it if it doesn't fill and will learn from the take-up.
This will give them great insight at little cost. Better than any poll: we, the investors, respond differently to questions if real money is involved and SS need to know the 'real money' response.
Good move on their behalf.
I don't think I'll be investing any real money in this one.
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Post by supernumerary on Oct 26, 2016 22:09:24 GMT
I must admit that PBL144 came in with a lower interest rate than I had expected. I thought SS would have gone for 10% (ie kept it in double figures) but they have been more aggressive. It's a small loan and I'm sure it will still fill. Even in the very unlikely event it doesn't, SS could probably cover it from their own capital. What will be most important to SS is the level of pre-funding compared with other similar loans at 12% (PBL086 and PBL134 come to mind) so they can judge demand. This will be a very good test for them. I do wonder if the move to bottom-up funding for all loans was part of this. While not perfect, it is a much better proxy for demand than the gaming that went on with proportional funding. SS is a business and they exist to make profit. To state the obvious, there are two main ways they can do this: - increase sales volumes - increase margin (interest rate and fees paid by borrowers less interest paid to lenders and other costs) [Noting that you can of course decrease one of these if the increase in the other more than outweighs it] I'm sure SS is looking to increase both. The reduction in interest rates to selected borrowers should increase sales volume and if the reduction is more than matched by the lower rate paid to lenders then the margin will increase. SS know that in many cases, in particular the small loans and the lower risk loans, demand from lenders far exceeds supply from borrowers. They can reduce the interest to lenders even if the interest paid by borrowers remains the same. Any profit maximising firm would want to bring supply and demand more into line. Maybe around a year ago when the subject of lower interest rates was previously discussed, SS clearly said that they would not reduce interest rates at that time. They wanted to keep rates at 12% to ensure that they could significantly grow the business and ensure that there was enough lender support to do so. Since that time SS has matured as a business and is now entering a new phase. The probably believe that they have enough scale to be sustainable and they can now focus as much on profit growth as sales growth. So where now? SS will be in a testing phase. They will gradually introduce more loans at a lower rate and analyse supply and demand. I guess for the time being, to be safe, they will want to keep demand from lenders to be significantly above supply to ensure that loans are still easily filled, but with experience they will move closer to the balance point. That means gradually introducing lower rates for progressively larger and riskier loans in a way that realigns lenders' expectations but doesn't scare them off. I might be wide of the mark, but that would be my approach to the business. Thank you for posting this. IMHO, a comprehensive review of what might unfold in the coming days, weeks and months ahead. It will be interesting to compare this 'template' that you have described, to what actually happens in the future. You may very well be, close in describing how events eventually unfold on Saving Stream...
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fp
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Post by fp on Oct 26, 2016 22:11:44 GMT
It will fill, but i'm sure it would be a totally different story for a 7 figure loan.
My gut feeling, this is the future for all the tiddlers as it is likely there will always be enough demand for small loans to fill, even at a lower rate.
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twoheads
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Post by twoheads on Oct 26, 2016 22:45:45 GMT
It will fill, but i'm sure it would be a totally different story for a 7 figure loan. My gut feeling, this is the future for all the tiddlers as it is likely there will always be enough demand for small loans to fill, even at a lower rate. We shall see...
Will it fill with prefunding? maybe so: some posts have reasoned that 'less observant' investors may not even notice the 9% and fail to adjust their prefunding.
I do not share this view: I believe that the SS investors are a more enlightened bunch and this loan will be a slow starter. [Having laid my cards on table... it's bound to fly!]
If I was a betting man... I'm not... unless you include all the gambling... I would punt on less than full prefunding even for this 'tiddler'.
Guesses of course. Only time, and 20-20 hindsight, will tell. I saw word of a P2P crystal ball on another thread... Can I buy it on A**z*n?
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mikes1531
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Post by mikes1531 on Oct 27, 2016 1:46:12 GMT
Will it fill with prefunding? maybe so: some posts have reasoned that 'less observant' investors may not even notice the 9% and fail to adjust their prefunding.
I do not share this view: I believe that the SS investors are a more enlightened bunch and this loan will be a slow starter. [Having laid my cards on table... it's bound to fly!]
If I was a betting man... I'm not... unless you include all the gambling... I would punt on less than full prefunding even for this 'tiddler'. As one who expressed concern that some investors wouldn't notice the lower interest rate, I have to give SS credit for mentioning it in the go-live email. I still expect it to be fully subscribed via pre-funding. Pre-funding of larger 12% loans used to total something around £5M. Even if the pre-funding requests on this PBL144 were to be a tenth of that, it still would be enough to fund the loan. So I expect nothing on the SM as soon as it goes live. A bit might appear shortly thereafter if some of the unobservant investors discover the 9% rate and wish to exit (though any whose allocation sent their balance negative wouldn't be able to do that). If some does appear on the SM after the go-live it will be interesting to see how quickly it is snapped up. I think we'll be surprised by how fast it disappears.
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Post by karloshi on Oct 27, 2016 6:48:15 GMT
I expect this will make it a lot easier to sell some of the not so appealing 12% loans on the secondary market.
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lobster
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Post by lobster on Oct 27, 2016 7:15:09 GMT
I expect this will make it a lot easier to sell some of the not so appealing 12% loans on the secondary market. I agree. Psychologically 12% loans look much more appealing if they are up against a 9% alternative right in front of your nose on the SM page.
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Post by supernumerary on Oct 27, 2016 11:48:14 GMT
PBL145 - 9.99996% has appeared...
If I miss the poll, whether I will be participating in PBL145 - 9.99996%, the answer will be no...
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