bob76
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Post by bob76 on Jan 22, 2016 20:21:39 GMT
AC give out far more information so that a more balanced view of the loan can be taken. ...apart from when you have to drill down/read reports and you realize that the LTV displayed was actually against the GDV (future, possible value of an asset) as opposed to assets with a tangible value right now (e.g. first charge on property, land value before development etc).
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mikes1531
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Post by mikes1531 on Jan 22, 2016 20:25:05 GMT
Rather have problems trying to invest in loans that have had next to no defaults (SS) than problems getting my money out of so many loans that are "suspended" Yes, but the shortage of info about overdue SS loans -- other than the periodic comment that 'the borrower is working on selling/refinancing' -- does concern me. Right now, SS are continuing to pay interest on overdue loans, but they aren't committed to doing that for more recent loans. I suspect investors will be less enthused about SS when a loan goes overdue and interest stops being paid. What happens then could be interesting.
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Post by chris on Jan 22, 2016 20:28:19 GMT
Selling at a premium is already coded and trivial to turn on but thus far our polling of lenders has suggested it's not a wanted feature and we still have some concerns about protecting new lenders. It's not popular on this forum either. I am not sure how the aftermarket is ever going to be fluid, if people can't sell at a premium. As long as the revised expected rate of return is displayed very clearly to the buyer at the time of purchase (with the understanding that a loss could be made if the loan is terminated sooner than expected), then I can't really see the issue. Seems to be working well on other platforms, like FC or FS, where people can actually buy some loan parts on the second market, and therefore achieve some good diversification. Apart from that, you would need a steady stream of big loans, triggering people to sell parts of their previous loans, to achieve diversification. That's not going to happen, given the pipeline and the imbalance of demand vs. supply on new loans. Apart from not being able to achieve diversification (and therefore having a risk much higher than the overall losses advertised by AC), this also means new lenders coming to the platform now won't find it attractive at all (since nothing to buy). Surely, AC is having an issue if its user base is not growing. There's 34 loans we're expecting to draw down in the next 60 or so days. The pipeline is as strong as it's ever been and new loans are being added all the time. Loan units are also sold all the time but because you can preset your targets against loans, even using the QAA to earn interest on idle funds, they are hoovered up quickly. In terms of aftermarket activity 95 loans have been traded in the last 7 days, 40 of them having over £1,000 traded, with several of them having tens of thousands traded. That's a quiet week but with our target system lenders can diversify without having to sit at their screen 24x7 trying to snag individual loan units in a race with others. With several loans drawing down next week, and much more activity to follow, we should see much more activity. The last month has seen 78 loans trading over £1,000, with 34 loans being in the tens of thousands, and just under 10 being in the hundreds of thousands traded. Total amount traded in the last 30 days was £3m. I'm actually of the opinion that we should allow premiums but understand other's reservations.
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Post by chris on Jan 22, 2016 20:29:58 GMT
AC give out far more information so that a more balanced view of the loan can be taken. ...apart from when you have to drill down/read reports and you realize that the LTV displayed was actually against the GDV (future, possible value of an asset) as opposed to assets with a tangible value right now (e.g. first charge on property, land value before development etc). Information you don't even get elsewhere.
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bob76
Posts: 103
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Post by bob76 on Jan 22, 2016 20:36:13 GMT
Total amount traded in the last 30 days was £3m. I'm actually of the opinion that we should allow premiums but understand other's reservations. Sure, an impressive amount, but a few pennies traded millions of times, based on my own experience/transaction reports. If the functionality to allow to sell at a (reasonable) premium is already coded, I am not sure why not to release it. If people don't want to use it, they won't have to. If buyers are making an informed decision, and willing to pay a premium to buy loans (and actual rates can't go into negative rates), then why not let them! I think AC is making a big mistake here.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 11,334
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Post by ilmoro on Jan 22, 2016 21:00:44 GMT
AC give out far more information so thats a more balanced view of the loan can be taken. ...apart from when you have to drill down/read reports and you realize that the LTV displayed was actually against the GDV (future, possible value of an asset) as opposed to assets with a tangible value right now (e.g. first charge on property, land value before development etc). Quite often you need to do a bit of drilling down to ascertain the correct LTV on SS loans.
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Post by chielamangus on Jan 22, 2016 21:20:28 GMT
AC give out far more information so that a more balanced view of the loan can be taken. ...apart from when you have to drill down/read reports and you realize that the LTV displayed was actually against the GDV (future, possible value of an asset) as opposed to assets with a tangible value right now (e.g. first charge on property, land value before development etc). I don't actually "like" this - I clicked the wrong button. How can I "unlike" it?? What I will say is that if you don't read the information provided critically then you deserve everything you get - or don't get.
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jonah
Member of DD Central
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Post by jonah on Jan 22, 2016 21:23:42 GMT
...apart from when you have to drill down/read reports and you realize that the LTV displayed was actually against the GDV (future, possible value of an asset) as opposed to assets with a tangible value right now (e.g. first charge on property, land value before development etc). I don't actually "like" this - I clicked the wrong button. How can I "unlike" it?? What I will say is that if you don't read the information provided critically then you deserve everything you get - or don't get. Click like again
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 11,334
Likes: 11,558
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Post by ilmoro on Jan 22, 2016 21:24:33 GMT
...apart from when you have to drill down/read reports and you realize that the LTV displayed was actually against the GDV (future, possible value of an asset) as opposed to assets with a tangible value right now (e.g. first charge on property, land value before development etc). I don't actually "like" this - I clicked the wrong button. How can I "unlike" it?? What I will say is that if you don't read the information provided critically then you deserve everything you get - or don't get. Click like again
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Post by chielamangus on Jan 22, 2016 21:24:55 GMT
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jonah
Member of DD Central
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Post by jonah on Jan 22, 2016 21:30:54 GMT
Total amount traded in the last 30 days was £3m. I'm actually of the opinion that we should allow premiums but understand other's reservations. Sure, an impressive amount, but a few pennies traded millions of times, based on my own experience/transaction reports. If the functionality to allow to sell at a (reasonable) premium is already coded, I am not sure why not to release it. If people don't want to use it, they won't have to. If buyers are making an informed decision, and willing to pay a premium to buy loans (and actual rates can't go into negative rates), then why not let them! I think AC is making a big mistake here. I don't see how premiums drives liquidity. Surely it will drive some of the over demand issues from SS for draw downs (see parasite discussion from earlier today). I realise that the AC assignment algorithm helps here to a degre. If you have a large position over concentrated in a small number of loans and want to generate some cash to buy into one of the 30+ loans in the upcoming list then sell away... You don't need to get paid extra just for that. AC has gone through a painful dry spell and I find it impressive their response to the new range of fire they seem to be drawing in the 2-3 days now that is looking like it may soon be over. Time for some hot chocolate.
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sl75
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Post by sl75 on Jan 22, 2016 21:40:33 GMT
My primary worry is new lenders. SavingStream is trivial to explain to the new P2P investor. AC would take several hours. Register -> Complete the ID check -> Deposit funds directly into the account you want to invest in (GEIA / GBBA / QAA) and the account manages the investment for you. I completely agree we can do a better job of explaining that but the actual system of investing is trivial unless you want to go into the detail, start reading credit reports, and picking and choosing which loans you invest in. Within "the account you want to invest in (GEIA / GBBA / QAA)" is an awful lot of complexity to explain to a newcomer - before even getting as far as mechanisms, how do they choose which they prefer until they understand what each of these is/does. Within each of the main accounts, a newcomer also needs to understand the concept that they can't just buy directly (even if there are units available for immediate investment), but must place an order that the system might think about processing some time within the next few days (or, at least in part, within a few minutes if there's stuff immediately available). The main thing the two sites seem to have in common is a chronic shortage of loans drawing down. AC's re-invention of fractional reserve banking (the QAA) is probably the easiest to understand on a superficial level for those used to regular bank deposit accounts (as it works in essentially the same way - taking potentially short-term deposits from investors, and using them as backing for longer-term investments in the hope that not everyone will withdraw at once, or if they do that the underlying assets will still remain liquid), however, its operation has a knock-on effect on the other accounts due to its preferential access to the markets, making them even harder to understand and use. A more traditional P2P site may well be harder to understand on a superficial level, but once the basic concepts are understood, there aren't any "hidden surprises".
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Post by Financial Thing on Jan 22, 2016 22:01:49 GMT
When the financial markets go down the toilet (as they did in 2007/8), the only thing concerning you now should be the p2p loan platform underwriting quality.
Yes I know it's pessimistic but it's what I believe is coming. I will continue to invest where I think loan underwriting is the strongest in order to ride out the storm.
Oh and Chris to be fair, A/C is the only platform I've had to call so I could understand how the system works. It's far from simple.
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SteveT
Member of DD Central
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Post by SteveT on Jan 22, 2016 22:07:11 GMT
Actually I think it is pretty simple, but it's not at all obvious that's the case on initial inspection (hence all the confused newbies looking for guidance here!)
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Post by bracknellboy on Jan 22, 2016 22:13:57 GMT
I don't see how premiums drives liquidity. Surely it will drive some of the over demand issues from SS for draw downs (see parasite discussion from earlier today). I realise that the AC assignment algorithm helps here to a degre. If you have a large position over concentrated in a small number of loans and want to generate some cash to buy into one of the 30+ loans in the upcoming list then sell away... You don't need to get paid extra just for that. AC has gone through a painful dry spell and I find it impressive their response to the new range of fire they seem to be drawing in the 2-3 days now that is looking like it may soon be over. Time for some hot chocolate. Utterly agree. Was going to post something similar but decided I couldn't be bothered. It would be a different story if there was a charge for selling on the SM, in which case there would be an argument that the fee was a barrier to liquidity and therefore allowing an offsetting premium should improve liquidity. but there isn't. It it illogical / intellectually flawed to conclude that SM premiums can improve SM liquidity without in turn having an impact on PM availability, since by definition it requires someone to over buy on the PM with the specific objective of selling-on. If there was a problem with fulfiling loans on the PM then an SM premium would fulfill a role - but there isn't (and the pre-listing underwriting model takes care of that particular non-problem). Of course, if your intent is to play the market in exactly that way i.e. buy to sell then you will want an SM which provides for premiums. Add to that a supposed AC 'ethos' of pricing for risk and rather than available lender funds/appetite [separate question as to whether one agrees that on any specific loan one agrees with their pricing]; and compatible with that a fixed rate rather than reverse auction 'let the market dictate the rate' model on the PM, then an SM premium would be particularly incongruous. The only thing which is holding back SM liquidity on AC is the same problem affecting the PM: deal flow. Increase deal flow on the PM and SM availability will follow. IMHO, ACs platform / 'interaction' model is bang on. The ability to set targets - which work aginst primary and secondary - and let the system work behind the scenes to distrubute between lenders accordingly is better than any other platform out there that I use. Yes it results in shrapnel transactions but why does that matter; its irrelevant. There is currently only one significant problem with AC (leaving aside any concerns on loan quality) and that is, yawn yawn yawn, realisation of the deal flow which would enable the platform to achieve what it is designed to do. The one caveat I would apply is that the broader market conditions change things. If for example loans are made in a period of high returns and market conditions change to lower returns (e.g. high inflation/high base rates/high end borrower rates move to a low rate environement) then the case for allowing SM premiums signifcantly changes. I think we are some way off of that being a factor.
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