seeingred
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Post by seeingred on Nov 4, 2016 16:26:58 GMT
OCTOBER 2015:"History tells us that bad borrowers play a large part in economic meltdowns. When bankers ploughed investors’ money into the mortgage market before the credit crisis in 2008, they took on more and more risky borrowers. A similar spiral could conceivably happen to P2P, warned Neil Faulkner of 4thWay, a risk rating agency. There is a shortage of borrowers. “As the P2P lending platforms grow they also, to an extent, have to accept worse borrowers. This imbalance could worsen causing some firms to lose their discipline and take on bad borrowers in a bid to stay attractive to lenders.” SEPTEMBER 2016:"To date investors have done too well, better than they deserve to, given the risks they have taken", said Mr Faulkner. "Rates are coming down......" Both quotes from Daily Telegraph money pages. 
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hantsowl
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Post by hantsowl on Nov 4, 2016 16:29:29 GMT
The previously mooted Gunboat relaunch has appeared on the pipeline... With a reduced %PA (9%)  ....  ....  . Anybody think we have seen the end of 12% loans on SS  It is starting to look like that is the case. New borrowers will see the 9/10% loans and insist on the lower rates for themselves. Maybe only 'high risk' loans will now be offered at 12% 😢
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poppyland
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Post by poppyland on Nov 4, 2016 16:39:46 GMT
10% I can just about live with. 9% forget it. With 9% loans SS no longer stands out from the competition, and may well lose business as people seek to diversify into other platforms.
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grahamg
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Post by grahamg on Nov 4, 2016 16:54:33 GMT
The previously mooted Gunboat relaunch has appeared on the pipeline... With a reduced %PA (9%) .... .... . Anybody think we have seen the end of 12% loans on SS It is starting to look like that is the case. New borrowers will see the 9/10% loans and insist on the lower rates for themselves. Maybe only 'high risk' loans will now be offered at 12% 😢 Not sure why i would want to invest in a grade 1 listed industrial building with pending planning permission and no proper exit strategy if PP fails at 9%
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jamesc
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Post by jamesc on Nov 4, 2016 17:17:57 GMT
It is starting to look like that is the case. New borrowers will see the 9/10% loans and insist on the lower rates for themselves. Maybe only 'high risk' loans will now be offered at 12% 😢 Not sure why i would want to invest in a grade 1 listed industrial building with pending planning permission and no proper exit strategy if PP fails at 9% Well someone has voted with their feet £3000 up for sale.
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Post by moonshine on Nov 4, 2016 17:40:09 GMT
Yep, SS has certainly lost some of it's original allure of being 'flat rate and simple to use'. Just too easy to go to MT (who are anyway on the up and generally have the feeling of being better managed). It all depends on the demand from investors over the next couple of years. But low rates on riskier loans = slower SM = less liquidity = SS no longer close to being the same company that made it successful. The last thing they want is to become another FS, but not sure they're switched on enough to see the potential of that happening, having been bullet proof over the last few years. We'll see what happens.
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seeingred
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Post by seeingred on Nov 4, 2016 17:43:50 GMT
If rates do decrease it is likely to be across all platforms that serve the same types of borrowers.
MT will not be immune from a sector wide reduction in rates.
If the gap narrows between the more 'hands off' platforms such as Z and FC and the platforms that need more active management, the marginal benefits will reduce - time spent at a computer juggling the SM on SS may become less worthwhile, for example. FC can easily yield between 7% after fees, and you can diversify across vastly more loans, and types of borrowers. If SS reduces to 9%, the extra risks (not to mention the time involved) may seem to many investors simply not worth it.
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Post by Deleted on Nov 4, 2016 18:11:55 GMT
Bloomberg had a long interview with a European Economist who feels that with ongoing QE around the world we will continue to see falling interest rates for people like us and continuing poor rates for the risks we take.
Now when did I last hear about poor rates for the risk? Wasn't it back in 2007?
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hantsowl
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Post by hantsowl on Nov 4, 2016 18:14:42 GMT
Not sure why i would want to invest in a grade 1 listed industrial building with pending planning permission and no proper exit strategy if PP fails at 9% Well someone has voted with their feet £3000 up for sale. So, if we buy the £3000 @ the current rate of 12%, will that rate remain once the new loan becomes active or will our rate be reduced to 9%? If the rate is reduced, could that set a precedent for all other loans and the rate changed at any time?
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SteveT
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Post by SteveT on Nov 4, 2016 18:19:05 GMT
If rates do decrease it is likely to be across all platforms that serve the same types of borrowers. MT will not be immune from a sector wide reduction in rates. MT started offering loans at less than 12% a long while ago (at 11% or 10%). The difference is that, in the main, they offer lenders clearly lower risk. As a result, I'm happy hold modest amounts in most of them, despite the reduced returns. The same cannot (yet) be said for the lower rate SS loans. Incidentally, MT also offers some loans at rates above 12%, often with better security than some of those on SS...
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mikes1531
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Post by mikes1531 on Nov 4, 2016 18:19:18 GMT
Anybody think we have seen the end of 12% loans on SS Nah! We still have the Edgbaston loan to look forward to. I can't help wondering whether these recent 9% and 10% loans have been released first so as to increase the appetite for that other loan. If it is released for investment, I predict it'll be well over-subscribed no matter how negative the opinions of it from those on this forum are.
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adrianc
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Post by adrianc on Nov 4, 2016 18:20:00 GMT
Well someone has voted with their feet £3000 up for sale. So, if we buy the £3000 @ the current rate of 12%, will that rate remain once the new loan becomes active or will our rate be reduced to 9%? If the rate is reduced, could that set a precedent for all other loans and the rate changed at any time? £3k is in the current £300k loan. The new loan is a new £500k loan... We'll need to wait for the GoLive email to tell us whether investments in PBL42 will be carried forward or if we need to prefund to continue. I would expect it'll be repay-and-prefund, given the change in rate, but... <shrug>
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star dust
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Post by star dust on Nov 4, 2016 18:27:08 GMT
Well someone has voted with their feet £3000 up for sale. So, if we buy the £3000 @ the current rate of 12%, will that rate remain once the new loan becomes active or will our rate be reduced to 9%? If the rate is reduced, could that set a precedent for all other loans and the rate changed at any time? I would hope they treat this as a new loan and repay existing investors. After all I don't think they could claim this is either what investors have agreed to (it's a substantial difference) or that you could necessarily sell on the SM afterwards if you wanted to. Its a long time since I read the T&Cs though.
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mikes1531
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Post by mikes1531 on Nov 4, 2016 18:35:22 GMT
Well someone has voted with their feet £3000 up for sale. So, if we buy the £3000 @ the current rate of 12%, will that rate remain once the new loan becomes active or will our rate be reduced to 9%? If the rate is reduced, could that set a precedent for all other loans and the rate changed at any time? I wouldn't expect the new loan to be treated an an extension of the existing PBL042, so the 12% should stop the day the new loan starts. I expect SS will want to make it easy for existing investors to roll their investments forward, so I'd expect them to do something similar to what they did for PBL093/DFL008, which was to transfer all investments in the old loan forward into the new loan unless the investor contacted them and specifically requested to be repaid when the loan rolled over. The email notification of the rollover should make it clear that the rate on the new loan is 9%. As for potential future rate changes, I wouldn't have thought SS could unilaterally reduce the interest rate on an existing loan, but I haven't checked their Ts&Cs.
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am
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Post by am on Nov 4, 2016 20:45:07 GMT
Are SS their own worst enemy?
The headline LTV is 65%. But there's another nominal £245,000 worth of security, not formally valued, which would (if 1st charges) bring the LTV down to c. 45%. But since we're not told anything about it, we don't know whether they're first charges, second charges, or whatever.
So we have an unknown LTV, if we trust the valuations, somewhere between 45% and 65%.
My worries would that the valuation has a high degree of uncertainty, and that the planning process might be prolonged. (I assume that the council does not want the site to be neglected and to deteriorate, so appropriate uses would be favourably received. The problem is what uses are compatible with the listed nature of the site.)
The other question that comes to mind is why is the borrower raising more money?
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