trevor
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Post by trevor on Aug 27, 2022 20:44:52 GMT
I have concerns about the future for AC retail investors particularly the IA account. Currently AC instant access is paying 3.75%. Rising base interest rates means that fairly soon FSCS qualifying accounts will be nearly par with AC IA. Ordinarily you would expect AC to raise the IA interest rate. But with a large proportion of the lender rates being 5% there is very little room for manoeuvre to increase AC IA rate. As a consequence lenders will start withdrawing from the AC IA and AC will declare non normal market conditions and block withdrawals. Since the base rate may well stay above recent trend for several years this may mean that the AC declared non normal market condition may stay in place for several years. The only way AC can prevent this is to raise the rate to lenders but the majority of pipeline loans are 5%. Agree or disagree? You’ll not be surprised to know that I am close to emptying my IA.
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p2pfan
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Full-Time Investor
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Post by p2pfan on Aug 27, 2022 23:50:16 GMT
You're right, that it doesn't make sense to continue with the AI accounts when 100% safe FSCS-protected bank accounts are paying similar returns and increasing their rates. While Loanpad have slightly increased their rates, AC have failed to do so. The difference is the former are committed to P2P (for now), whereas the latter aren't. As you know, AC have multiple funding lines from institutional investors. The latest is the £200 million they announced a week ago they now have from Aeon Investments. Therefore, AC don't see the need to offer you or I a rate of return that is even a third of what will very soon be the rate of inflation. If they can get money from us at dirt cheap rates, then they will tolerate us, otherwise their institutional buddies are their preferred lenders. We've seen how almost all of the bigger UK P2P platforms have quit the retail P2P space as they preferred to get money from elsewhere. For what it's worth, my focus is on lending via Loanpad, combined with, for higher rates of returns, platforms that pay 7%+.
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Post by crabbyoldgit on Aug 28, 2022 6:14:22 GMT
If inflation stays high then interest rates to borrowers will rise and the automated accounts will become unsustainable at there present rates . However AC could I suppose just shut these accounts and come out with the mk3 version filled with new higher rate loans to attract new money or withdrawn interest from the old accounts. What is happening to the ggba and old green account? most loans there must be at term or in default. Is the much vaunted protection fund bust in intact still unused.
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ashtondav
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Post by ashtondav on Aug 28, 2022 18:02:08 GMT
I think AC will continue with retail lenders. If you have ever dealt with rapacious commercial lenders in this space they are MUCH MORE demanding on rates of return. The only downside is dealing with a large number of small, whining retail investors so i would not be surprised to see minimum investment levels raised to say £10,000 to £20,000 to get reduced costs of dealing with widows, orphans and more naive "savers".
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trevor
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Post by trevor on Aug 28, 2022 19:27:12 GMT
If inflation stays high then interest rates to borrowers will rise and the automated accounts will become unsustainable at there present rates . However AC could I suppose just shut these accounts and come out with the mk3 version filled with new higher rate loans to attract new money or withdrawn interest from the old accounts. What is happening to the ggba and old green account? most loans there must be at term or in default. Is the much vaunted protection fund bust in intact still unused. There are still loans in GBBA with double figures months to run
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Aug 28, 2022 19:48:51 GMT
I think AC will continue with retail lenders. If you have ever dealt with rapacious commercial lenders in this space they are MUCH MORE demanding on rates of return. The only downside is dealing with a large number of small, whining retail investors so i would not be surprised to see minimum investment levels raised to say £10,000 to £20,000 to get reduced costs of dealing with widows, orphans and more naive "savers". These aren't commercial lenders, they are investment funds/trusts & their rates are similar to retail as they are lending in the same pool of loans apparently (albeit separate loans). If AC made less errors there would be less lenders whinging & having to fix them ... just checking & proof reading comms would be a start. The difference between LP & AC is that LP are trimming their own margin to pay lenders, AC would be trimming the PF so weakening the security. Raising rates in current market is quite risky with SME & development funding as there is already considerable cost pressure in borrowers. There are two sides to the equation & platforms need to consider both.
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Post by df on Aug 28, 2022 20:33:02 GMT
I have concerns about the future for AC retail investors particularly the IA account. Currently AC instant access is paying 3.75%. Rising base interest rates means that fairly soon FSCS qualifying accounts will be nearly par with AC IA. Ordinarily you would expect AC to raise the IA interest rate. But with a large proportion of the lender rates being 5% there is very little room for manoeuvre to increase AC IA rate. As a consequence lenders will start withdrawing from the AC IA and AC will declare non normal market conditions and block withdrawals. Since the base rate may well stay above recent trend for several years this may mean that the AC declared non normal market condition may stay in place for several years. The only way AC can prevent this is to raise the rate to lenders but the majority of pipeline loans are 5%. Agree or disagree? You’ll not be surprised to know that I am close to emptying my IA. Just to add to what you've already said. These 5% loans are long term, most are 5 years. I agree, I can't see AAs being sustainable. I have a very little amount in QAA for feeding my MLA loan book, but when it's gone I won't be willing to replace it.
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Post by df on Aug 28, 2022 22:05:59 GMT
If inflation stays high then interest rates to borrowers will rise and the automated accounts will become unsustainable at there present rates . However AC could I suppose just shut these accounts and come out with the mk3 version filled with new higher rate loans to attract new money or withdrawn interest from the old accounts. What is happening to the ggba and old green account? most loans there must be at term or in default. Is the much vaunted protection fund bust in intact still unused. There's only one loan (531) in Green now, not default yet, but not going smoothly. It's just been extended for an extra 6 months. The other turbine lot has been repaid. I'm only in GBBA1. I can see 5 loans there - Northern, Diamant, Duff, Steven and the same Steven&Stephen. All in default. There's some hope for 227, but the others are crystallised losses.
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ceejay
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Post by ceejay on Aug 29, 2022 12:16:46 GMT
I have concerns about the future for AC retail investors particularly the IA account. Currently AC instant access is paying 3.75%. Rising base interest rates means that fairly soon FSCS qualifying accounts will be nearly par with AC IA. Ordinarily you would expect AC to raise the IA interest rate. But with a large proportion of the lender rates being 5% there is very little room for manoeuvre to increase AC IA rate. As a consequence lenders will start withdrawing from the AC IA and AC will declare non normal market conditions and block withdrawals. Since the base rate may well stay above recent trend for several years this may mean that the AC declared non normal market condition may stay in place for several years. The only way AC can prevent this is to raise the rate to lenders but the majority of pipeline loans are 5%. Agree or disagree? You’ll not be surprised to know that I am close to emptying my IA. Agreed. I had left a modest chunk in QAA, mainly due to inertia, but with 1 year FSCS now going above 3% there is really no excuse for continuing to accept the risk of a further lockin for such a tiny premium. I'm now fully out of AC apart from some very unlikely MLA holdings.
Overall my XIRR is about 6% and I'll live with that.
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trevor
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Post by trevor on Aug 29, 2022 13:15:56 GMT
Thanks for your inputs. My AC IA is empty.
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billt
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Post by billt on Aug 29, 2022 13:37:02 GMT
My holdings 29/08/2022
MLA £1,948 13 Loans / 8 in default
GEA £497 1 Loan / 1 in default
GBBA1 £3,703 9 Loans / 8 in default
GBBA2 £17,273 50 Loans / 16 in default
£12,319 outstanding interest
Not looking good
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bugs4me
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Post by bugs4me on Aug 29, 2022 14:09:33 GMT
My holdings 29/08/2022 MLA £1,948 13 Loans / 8 in default GEA £497 1 Loan / 1 in default GBBA1 £3,703 9 Loans / 8 in default GBBA2 £17,273 50 Loans / 16 in default £12,319 outstanding interest Not looking good Apologies everyone as not up to speed with AC as managed to exit during the good times or was it just before the ducking and diving shenanigans started. But out of interest, is not the PF meant to be covering these defaults even though it was being 'marketed' as discretionary. Or are AC monitoring fees still being charged against the defaults resulting in a reduced eventual return to lenders. On another subject and as an aside, if I was an institutional investor putting in say £200m I'd demand expect a superior return than retail lenders and certainly superior service. Just an observation on my part.
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Post by overthehill on Aug 29, 2022 14:20:55 GMT
My holdings 29/08/2022 MLA £1,948 13 Loans / 8 in default GEA £497 1 Loan / 1 in default GBBA1 £3,703 9 Loans / 8 in default GBBA2 £17,273 50 Loans / 16 in default £12,319 outstanding interest Not looking good
AC has never looked good, more Funding Circle esque.
I reduced my exposure some time ago and would have exited by now had it not been for the lack of alternatives to diversify. I don't trust putting any more than £200 in any loan. I've also got defaults and losses in the business accounts with a disproportionate amount of my money, coincidence or not , I'm patiently waiting for the provision fund to pay out !!!!!
And still a lot of crazy investments at 5% in MLA and 4% in autoinvest accounts even with their record. Good luck with that.
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Post by overthehill on Aug 29, 2022 14:24:17 GMT
My holdings 29/08/2022 MLA £1,948 13 Loans / 8 in default GEA £497 1 Loan / 1 in default GBBA1 £3,703 9 Loans / 8 in default GBBA2 £17,273 50 Loans / 16 in default £12,319 outstanding interest Not looking good Apologies everyone as not up to speed with AC as managed to exit during the good times or was it just before the ducking and diving shenanigans started. But out of interest, is not the PF meant to be covering these defaults even though it was being 'marketed' as discretionary. Or are AC monitoring fees still being charged against the defaults resulting in a reduced eventual return to lenders. On another subject and as an aside, if I was an institutional investor putting in say £200m I'd demand expect a superior return than retail lenders and certainly superior service. Just an observation on my part. Yes, yes and yes.
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billt
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Post by billt on Aug 29, 2022 16:07:16 GMT
On the topic of monitoring fees, one example ;-
Defaulted loan from 29/03/2016 to 09/07/2022 Monitoring Fees, £134,087
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