Post by lynnanthony on Apr 25, 2015 12:26:59 GMT
I have £1000 in loan 151. My target is set at £1000. On 24th April at 08:42 I received interest and £1.81 principal repayment. At 10:38 the same day the system topped me back up to £1000 by buying £1.81. System working as it should.
But where did the £1.81 I bought come from? I have not noticed any of loan 151 available for sale. Someone must have put up for sale almost exactly the right amount to fill the demand caused by the principal repayment. If they had offered too little I would not have got my full £1.81; if they had offered too much there would have been some left over to show as units available.
In fact it’s more complex; the seller must have offered up enough to fill the demand caused by the principal repayment plus any demand caused by lenders having targets set higher than their holdings, or lenders with targets set who have no current holdings.
If the seller/sellers (underwriters?) want to sell loan 151, why would they only offer enough to fill demand as it occurs, why not offer some to show as available? What is the benefit of this behaviour? Am I missing something? (This behaviour is not restricted to loan 151, I have just used 151 as an example. I have noted it on other, but not all, amortised loans.)
But where did the £1.81 I bought come from? I have not noticed any of loan 151 available for sale. Someone must have put up for sale almost exactly the right amount to fill the demand caused by the principal repayment. If they had offered too little I would not have got my full £1.81; if they had offered too much there would have been some left over to show as units available.
In fact it’s more complex; the seller must have offered up enough to fill the demand caused by the principal repayment plus any demand caused by lenders having targets set higher than their holdings, or lenders with targets set who have no current holdings.
If the seller/sellers (underwriters?) want to sell loan 151, why would they only offer enough to fill demand as it occurs, why not offer some to show as available? What is the benefit of this behaviour? Am I missing something? (This behaviour is not restricted to loan 151, I have just used 151 as an example. I have noted it on other, but not all, amortised loans.)
