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Post by nightmare on Sept 24, 2015 10:06:35 GMT
During last week, I have sold off the majority of my older loans with > 24 months o/s at par or a tiny premium where the interest rate is less than the fixed rate that will be allocated to a loan of that risk/length next week. I am aware that autobid will pick some of these up, but it seems illogical to buy loans at lower interest rate than one will get the same quality loan next week. Am I missing something? There are 3 types of people who are buying your loans parts. 1. Investors are (quite rightly IMHO) encouraged to spread the risk of their investment over as many loans as possible so for newer investors with a large sum to invest all at once it makes sense to pick up existing loan parts albeit at slightly lower rates than they will get in the future. 2. People who have been living in a cave for the last month and don't know that fixed rates are being introduced. 3. Stupid people. I'd like to think that the majority of your buyers are type 1s but I suspect in reality plenty enough of them are type 3s.
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Post by pete101 on Sept 24, 2015 11:16:16 GMT
Thanks for those comments, which echo my own thoughts. I guess the reality is that fixed rates are aimed at type 3 anyway and the way the platform has gone will protect them in the future.
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registerme
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Post by registerme on Sept 24, 2015 11:19:31 GMT
I don't think it's fair to say that people using the new FC model are stupid, but the new model will appeal to different types of investors, and different types of funds (ISA money, institutional money, investment trust funds etc). What it doesn't do, necessarily, is appeal to those of us who are more active and make more use of the SM in terms of trading loan parts of flipping property parts.
We will have to see.
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jimbob
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Post by jimbob on Sept 24, 2015 13:30:51 GMT
I've just joined Funding Circle but don't the fixed rates present a great short term opportunity with the platform ?
Looking at my investments so far I've bought:
180 9.3 A+
248 10.5 A
178 11.7 B
130 12.9 C
(Averages)
with the rest of the cash sitting round on some autobids as I try and diversify my way to the £1k benchmark for the £50.
Am not megadiversified or experienced with the system, so avoiding D and Es for now.
Having said that, I guess I should probably try and sell some of the few loan parts I have that are below the fixed before that kicks in too though...
But loans above the fixed rates will surely be worth their weight in gold after the switch !
Edit: Having reviewed the book, 4 loans don't make the cut. Obviously I'll want to flog these before the switch and then buy back... but as I'm not fully invested yet also leave it as late as possible ^_~
Or hold on - it says for new loans. Though I guess it'll make it tough to shift a below FI par loan once the fixed rates come in, so the selling logic still holds ?
How long does flogging loans take on the SM, do I earn interest whilst they're on there and when is the Fixed interest change happening - Oct 1st ?
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SteveT
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Post by SteveT on Sept 24, 2015 13:59:27 GMT
Broadly speaking, yes, although "WTWIG" may be a bit of an overclaim; remember you can never make more than 3% mark-up less 0.25% sale fee, however good the Buyer Rate.
My averages by rate band, having always stuck to the large loans and early closers, are well above the future fixed rates so they should sell well (bar any that go RBR before I get shot of them...)
A+ 10.0%
A 11.6%
B 12.6%
C 13.6%
D 14.7%
E 18.2%
The question with many of them is whether to sell at, say, 1.5% premium now or hold on and hope for 2.5% to 3% in a month or so's time.
[To answer your added questions, the Fixed Rate loans start next week, you still accrue interest whilst loans are listed on the SM and the time it takes to sell depends how attractive you make the Buyer Rate versus whatever else is out there; anything from seconds to months but you should sell within a few days if you list at / close to "best available"]
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sl75
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Post by sl75 on Sept 25, 2015 14:57:27 GMT
... you can never make more than 3% mark-up less 0.25% sale fee ... PLUS the interest accrued between purchase and sale MINUS the monthly fee assocated with any monthly payments that occur whilst you are holding the loan part. So, in principle, if you purchase a loan part at (say) 19.8% interest (so exactly 1.65% per month) a few moments after a payment has cleared, and sell it at max premium a few moments before the system establishes whether the next payment has cleared (thereby avoiding the monthly fee entirely), you could get 3% - 0.25% + 1.65% = 4.4% gain, with no exposure to simple non-payment risk (only exposure to RBR risk, and risk of non-sale multiplied by non-payment risk). Actually finding a loan part for sale at par with 19.8% interest or similar a few moments after a payment has cleared is left as an exercise to the reader... (or the reader's bot!)
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SteveT
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Post by SteveT on Sept 30, 2015 6:06:47 GMT
The current dearth of new loans on the PM makes it flipping marvellous for moving on property loan parts at par. Stuff being picked up that I haven't had a bite on for some weeks  |
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min
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Post by min on Sept 30, 2015 6:21:51 GMT
The current dearth of new loans on the PM makes it flipping marvellous for moving on property loan parts at par. Stuff being picked up that I haven't had a bite on for some weeks Indeed, all sorts flying off the shelves. Sold 2 x B parts at 9.8% yesterday - both with 2%+ markup.
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Post by GSV3MIaC on Sept 30, 2015 7:05:32 GMT
Perhaps FC are interested in assisting (y)our exit!
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SM rates
Sept 30, 2015 7:37:00 GMT
via mobile
Post by nickthefool on Sept 30, 2015 7:37:00 GMT
Yep I sold about 1/3 of my parts for sale yesterday evening. They'd all been listed for about a week too.
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Post by goldservice on Sept 30, 2015 8:06:20 GMT
Red hot Tuesday, huh? All this makes me sick  ( All my 8% property parts expired and dropped off the sale list a day or two ago and I hadn't yet relisted them so sold nothing yesterday. But thanks for the head up! |
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adrianc
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Post by adrianc on Sept 30, 2015 8:12:36 GMT
Red hot Tuesday, huh? All this makes me sick ( All my 8% property parts expired and dropped off the sale list a day or two ago and I hadn't yet relisted them so sold nothing yesterday. But thanks for the head up! If it's any consolation, I've been shifting a chunk more than average, but definitely not flying off the shelves - and the last day or two's dried up a bit.
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acky
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Post by acky on Sept 30, 2015 12:04:52 GMT
Red hot Tuesday, huh? All this makes me sick ( All my 8% property parts expired and dropped off the sale list a day or two ago and I hadn't yet relisted them so sold nothing yesterday. But thanks for the head up! If it's any consolation, I've been shifting a chunk more than average, but definitely not flying off the shelves - and the last day or two's dried up a bit. I've not seen any increase in sales either!
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Post by bonfemme on Sept 30, 2015 12:28:30 GMT
If it's any consolation, I've been shifting a chunk more than average, but definitely not flying off the shelves - and the last day or two's dried up a bit. I've not seen any increase in sales either! My property loan part sales have quadrupled in the last three days. However, they had dried up previously when others had reported booming business. Maybe it's some sort of rota?
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nick
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Post by nick on Sept 30, 2015 14:46:33 GMT
Same here. Almost certainly due to the dry up of loans on the PM. Looks like FC are being cautious on roll out of fixed rates, but I suspect they will gradually open the taps on deal flow
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( All my 8% property parts expired and dropped off the sale list a day or two ago and I hadn't yet relisted them so sold nothing yesterday. But thanks for the head up!
