p2pfan
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Post by p2pfan on Jul 23, 2022 14:08:26 GMT
I note that SoMo have launched a mechanism to lend to loans in their successful Payl8r consumer loan division, which they have branded as 'SoMo Credit'. It offers rates of return of up to 10.08% per annum, depending on your risk appetite. The details are here. When P2P interest rates are collapsing, the rates on offer seem very tempting. However, despite what seems like rock-solid protection cover provided by SoMo for anyone who lends, it seems on the higher end of the risk spectrum to me? Unlike SoMo's bridging loans which are protected with independently-valued property, there is no collateral lenders' loans can call upon with SoMo Credit? As the economy is tanking, I'm wondering if significantly more consumers will begin to default on such loans. (Is there any data on that from previous recessions?) What are your thoughts on lending via SoMo Credit? |
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Greenwood2
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Post by Greenwood2 on Jul 24, 2022 6:11:21 GMT
I note that SoMo have launched a mechanism to lend to loans in their successful Payl8r consumer loan division, which they have branded as 'SoMo Credit'. It offers rates of return of up to 10.08% per annum, depending on your risk appetite. The details are here. When P2P interest rates are collapsing, the rates on offer seem very tempting. However, despite what seems like rock-solid protection cover provided by SoMo for anyone who lends, it seems on the higher end of the risk spectrum to me? Unlike SoMo's bridging loans which are protected with independently-valued property, there is no collateral lenders' loans can call upon with SoMo Credit? As the economy is tanking, I'm wondering if significantly more consumers will begin to default on such loans. (Is there any data on that from previous recessions?) What are your thoughts on lending via SoMo Credit? Looks like a the T&Cs have been cut and pasted from the bridging site and not edited. Likewise the scrolling banner. And a few typos. Has this been going long? It still looks pretty unfinished. The safer end is similar rates to the bridging loan rates not sure if it is worth doing both. Zopa survived the 2008 recession, defaults went up and returns went down but mine never went negative.
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iRobot
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Post by iRobot on Jul 24, 2022 11:59:08 GMT
I would have a number of questions which, if this were an investment vehicle I'd be interested in boarding, I might pursue. Instead, I'll leave them here should others wish to pick up on them or should bridgecrowd wish to comment. - T&C's / FAQ - as mentioned above, this looks like it needs some tidying up and correction
- When digging into a particular 'block' I'd need to understand how / why:
a. All bar two* of the individual loan's Terms are marked up as are deemed as 'Ended' - are all of these individual loans effectively in Default? (And, if so, what does the 'Performing' column relate to?)
b. Why is the 'Loan Amount' column blank?
c. The sum of the individual loans doesn't appear to match the Block's total amount; eg:
i. block AAA:3-2022-07-18 appears to have a total 'value' of c. £63k. (taking the amount available and 'uplifting' it based on the % stated)
ii. the sum of the individual 'loan amount outstanding' totals c. £57.5k - I'd be looking to understand the variance. (There a number of entries with an LAO of 0.00, maybe there some correlation there?)
I thought it would be good to understand what an end-to-end transaction looks like, so taking a peek at one of the 'Retailer' website there is this illustration: " Cost of Goods £350, Deposit £50, Amount of Credit £300, Annual Fixed Interest Rate 34.04%, Monthly Payment £13.50, Term 36 months, Total Payable £536, Representative 39.9% APR" Couple of points here: 39.9% APR - ouch! (but not surprising) Term 36 months - going back to *, these loans are presumable available on terms longer than the 12m or less time frame ascribed to the various AAA / AAB blocks available here. Are these Blocks then made up of loans that are post-Term or nearing the end of their Term? (The two mentioned above had '1M, 2D' and '28D' remaining at the time of writing). Are SOMO affectively adopting a common P2P 'strategy' of flipping loans as they near their Term - or are actually out of Term - and at their riskiest? Are SOMO removing these loans from their own books (or those of their Institutional investors) and curating them into 'Blocks' for retail 'sophisticated and HNW' consumption? Is this, in effect, building up high-risk packages of toxic (or very near toxic) loan commitments? Are the 'AAB' and 'AAA' ratings really indicative the safety level these blocks warrant? Or should they really be translated as 'bad' and 'not-quite-so-bad', respectively? Anyone else watched 'The Big Short' recently  Edit: for those that may not be familiar with the film reference: 'Investopedia: The Big Short explained' |
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Greenwood2
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Post by Greenwood2 on Jul 24, 2022 17:44:00 GMT
I would have a number of questions which, if this were an investment vehicle I'd be interested in boarding, I might pursue. Instead, I'll leave them here should others wish to pick up on them or should bridgecrowd wish to comment. - T&C's / FAQ - as mentioned above, this looks like it needs some tidying up and correction
- When digging into a particular 'block' I'd need to understand how / why:
a. All bar two* of the individual loan's Terms are marked up as are deemed as 'Ended' - are all of these individual loans effectively in Default? (And, if so, what does the 'Performing' column relate to?)
b. Why is the 'Loan Amount' column blank?
c. The sum of the individual loans doesn't appear to match the Block's total amount; eg:
i. block AAA:3-2022-07-18 appears to have a total 'value' of c. £63k. (taking the amount available and 'uplifting' it based on the % stated)
ii. the sum of the individual 'loan amount outstanding' totals c. £57.5k - I'd be looking to understand the variance. (There a number of entries with an LAO of 0.00, maybe there some correlation there?)
I thought it would be good to understand what an end-to-end transaction looks like, so taking a peek at one of the 'Retailer' website there is this illustration: " Cost of Goods £350, Deposit £50, Amount of Credit £300, Annual Fixed Interest Rate 34.04%, Monthly Payment £13.50, Term 36 months, Total Payable £536, Representative 39.9% APR" Couple of points here: 39.9% APR - ouch! (but not surprising) Term 36 months - going back to *, these loans are presumable available on terms longer than the 12m or less time frame ascribed to the various AAA / AAB blocks available here. Are these Blocks then made up of loans that are post-Term or nearing the end of their Term? (The two mentioned above had '1M, 2D' and '28D' remaining at the time of writing). Are SOMO affectively adopting a common P2P 'strategy' of flipping loans as they near their Term - or are actually out of Term - and at their riskiest? Are SOMO removing these loans from their own books (or those of their Institutional investors) and curating them into 'Blocks' for retail 'sophisticated and HNW' consumption? Is this, in effect, building up high-risk packages of toxic (or very near toxic) loan commitments? Are the 'AAB' and 'AAA' ratings really indicative the safety level these blocks warrant? Or should they really be translated as 'bad' and 'not-quite-so-bad', respectively? Anyone else watched 'The Big Short' recently Edit: for those that may not be familiar with the film reference: 'Investopedia: The Big Short explained'I do have a bit of trust in Somo (bridging) so I hope they are not palming off bad loans on lenders in Somo Credit, but I guess we will see. A bit more information is needed
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aj
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Post by aj on Jul 25, 2022 10:24:52 GMT
Although I trust SoMo, unsecured lending is not for me, especially in the current economic climate.
I hope they do well from it and it doesn't prove an unwelcome distraction/financial drain from their bridging business.
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Post by davefoz on Jul 25, 2022 15:21:49 GMT
Poor rates of return versus safer property lending & far too complex…steer clear is my view.
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Greenwood2
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Post by Greenwood2 on Jul 25, 2022 15:57:15 GMT
Poor rates of return versus safer property lending & far too complex…steer clear is my view. It doesn't seem too complicated at the user end, and to an extent it's occupying the market place vacated by Zopa and Ratesetters, fairly well diversified loans with a capital protection similar to Ratesetters provision fund (up to a max percent). I'm not entirely convinced, but it is interesting. It needs the web site tidying up and a bit clearer explanation of how the loan blocks work, hopefully someone will take the plunge and report back.
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Post by davefoz on Jul 25, 2022 18:45:45 GMT
Poor rates of return versus safer property lending & far too complex…steer clear is my view. It doesn't seem too complicated at the user end, and to an extent it's occupying the market place vacated by Zopa and Ratesetters, fairly well diversified loans with a capital protection similar to Ratesetters provision fund (up to a max percent). I'm not entirely convinced, but it is interesting. It needs the web site tidying up and a bit clearer explanation of how the loan blocks work, hopefully someone will take the plunge and report back. Presumably profiling categorises borrowers, into a credit risk bands based on other customers payment history. They are however different individuals so could behave entirely different way. The beauty of lending against property is we all have an understanding of the market and can make a simple calculation of our potential exposure. It’s very difficult to make an informed decision on the risk from unsecured lending against individuals.
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Greenwood2
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Post by Greenwood2 on Jul 25, 2022 19:33:24 GMT
It doesn't seem too complicated at the user end, and to an extent it's occupying the market place vacated by Zopa and Ratesetters, fairly well diversified loans with a capital protection similar to Ratesetters provision fund (up to a max percent). I'm not entirely convinced, but it is interesting. It needs the web site tidying up and a bit clearer explanation of how the loan blocks work, hopefully someone will take the plunge and report back. Presumably profiling categorises borrowers, into a credit risk bands based on other customers payment history. They are however different individuals so could behave entirely different way. The beauty of lending against property is we all have an understanding of the market and can make a simple calculation of our potential exposure. It’s very difficult to make an informed decision on the risk from unsecured lending against individuals. True, but Zopa managed that for at least 15 years giving good returns to lenders and Ratesetters for a bit shorter time, then they both became so successful they went main stream. I agree property is better assuming you can believe the LTVs, (never believe development valuations) which I think you can on Somo (hence is it worth going to the Somo Credit?), but that also gives me some confidence in Somo Credit.
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Greenwood2
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Post by Greenwood2 on Aug 1, 2022 5:33:42 GMT
Looks like they've fixed something all the loans that had loan term ended now have months and days left in that column.
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Post by somo on Aug 2, 2022 11:23:36 GMT
SoMo Credit is currently in beta stage (testing). It is not live for investors or the public. We are in the process of reviewing the website content and the offering to investors. The feedback, opinions and comments from a selection of seasoned and expert investors who have visited the site on this forum is extremely valuable to us in this development stage and we really appreciate your contributions. We will provide further posts here in due course.
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