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Post by crabbyoldgit on Jan 23, 2016 20:03:42 GMT
I cannot see any loans in the upcomming loans list suitable for the geia, however a fair few from memory are going to refinance and pay off ac early in the next couple of months.The provision fund sits at about 3% now,as the overall pot of live loan value in the geia reduces and the provision fund sum does not one would expect the provision fund to strengthen rapidly and 7% return with a 5% fund looks from my amateur eyes good compared to a 7% new loan on the mlia.Am i missing something here,ok it takes a long time to increase ones geia holding but i am in no hurry.Also with the effective ending of onshore wind generation,reducing fossil fuel costs an existing wt with a fixed price for energy generated would i think have a greater resale value and hence offer greater security.
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Post by chris on Jan 23, 2016 20:16:37 GMT
I cannot see any loans in the upcomming loans list suitable for the geia, however a fair few from memory are going to refinance and pay off ac early in the next couple of months.The provision fund sits at about 3% now,as the overall pot of live loan value in the geia reduces and the provision fund sum does not one would expect the provision fund to strengthen rapidly and 7% return with a 5% fund looks from my amateur eyes good compared to a 7% new loan on the mlia.Am i missing something here,ok it takes a long time to increase ones geia holding but i am in no hurry.Also with the effective ending of onshore wind generation,reducing fossil fuel costs an existing wt with a fixed price for energy generated would i think have a greater resale value and hence offer greater security. As I understand it smaller installations, of the size we fund, are still financially viable with the County Tyrone is still in the pipeline awaiting the final legal hurdle to be overcome. It could fall away, could draw in February, could even draw this month but I wouldn't hang my hat on that. There are other green loans in our pipeline but they haven't yet had the offer acceptance letters signed and returned by the borrowers so they aren't shown on the upcoming loans page. You are right that if nothing else changes existing loans will amortise down and the provision fund will increase as each payment comes in, and it could grow quite quickly in that regard. I don't know if we're facing much rate competition in that sector, but if we are and the provision fund is growing in this way then there could be an argument to launch a series 2 green account at a slightly reduced rate to win more deal flow. I don't think the rates are the problem though at the moment.
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sl75
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Post by sl75 on Jan 23, 2016 23:07:09 GMT
The QAA is also not fractional reserve banking. It is still £1 in £1 lent same as the rest of the platform. There is just an emphasis on access times which are partially enabled by having some cash sat idle, along with several other clever computer systems that keep access times to milliseconds and allow automatic deposits and withdrawals on demand from other accounts. What you describe as "some cash sat idle" is precisely the fractional reserve. Just like the banks who promise "quick access" on demand to deposits, AC does not have the necessary full reserve to back its own promise of quick access. In the rest of the platform, no promise of quick access is made, and investments that promise to return funds within the space of several months are 1:1 backed by loans that promise to return funds within the space of several months. However, the QAA promises to return funds "quickly", and explicitly states that the average withdrawal time is 0 seconds. It only has a fraction of the assets held in a form that is guaranteed to allow it to return funds on the time scale promised - i.e. a fractional reserve. In present market conditions, practically all loan units can be liquidated on demand, so the QAA can indeed deliver on its promises, but in the event that AC ever manage to deliver a deal flow sufficient to saturate investor demand for loan units, this won't necessarily be the case in the future. Edit: I'm sure AC's lawyers will have taken measures to ensure that, in their opinion (and hopefully one they'd be able to persuade a judge to agree with if such were ever to become necessary) it isn't considered equivalent to FRB de-jure. However, de-facto I cannot really see any fundamental difference.
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Post by chris on Jan 24, 2016 8:47:47 GMT
The QAA is also not fractional reserve banking. It is still £1 in £1 lent same as the rest of the platform. There is just an emphasis on access times which are partially enabled by having some cash sat idle, along with several other clever computer systems that keep access times to milliseconds and allow automatic deposits and withdrawals on demand from other accounts. What you describe as "some cash sat idle" is precisely the fractional reserve. Just like the banks who promise "quick access" on demand to deposits, AC does not have the necessary full reserve to back its own promise of quick access. In the rest of the platform, no promise of quick access is made, and investments that promise to return funds within the space of several months are 1:1 backed by loans that promise to return funds within the space of several months. However, the QAA promises to return funds "quickly", and explicitly states that the average withdrawal time is 0 seconds. It only has a fraction of the assets held in a form that is guaranteed to allow it to return funds on the time scale promised - i.e. a fractional reserve. In present market conditions, practically all loan units can be liquidated on demand, so the QAA can indeed deliver on its promises, but in the event that AC ever manage to deliver a deal flow sufficient to saturate investor demand for loan units, this won't necessarily be the case in the future. Edit: I'm sure AC's lawyers will have taken measures to ensure that, in their opinion (and hopefully one they'd be able to persuade a judge to agree with if such were ever to become necessary) it isn't considered equivalent to FRB de-jure. However, de-facto I cannot really see any fundamental difference. Sorry, confused the banks lending out multiples of deposited cash with the practice of only having some cash in reserve (IT director not banker). We do not lend out multiples of cash, it's £1 in and £1 out. Where I believe there is an important distinction is that this is not a current account or deposit account it is expressly an investment account and we make no promises at all about access time. The account is structured around quick access so there is a proportion (far in excess of what a bank would hold) held as cash. The average access time is also explicitly labeled as being the average for the past 7 days. If there is a massive run on the account then it is a near certainty that the access times would increase and that we would be reliant on the aftermarket. Again this is something the account explicitly states. However the investment strategy limits the loans that are held to those where there is demand or where they qualify for one of the other investment accounts so that as those accounts grow demand will be created, and individuals are limited to the amount they can deposit to prevent any one person (or small group of people) being able to create a run on the account.
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am
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Post by am on Jan 24, 2016 9:11:45 GMT
QAA could take a chunk if needed as 7% is well over it's coupon and would help with the PF. That said, I would assume that that QAA would only buy if AC knew that there was demand exceeding supply.... hmmm. Imagine *insert graphic of crystal ball here* *insert wavy hands here and mystic music here*.... Loan X comes up, at £75000 with a 7% rate. AC see that whilst not vastly popular, £95000 of targets are set across all MLIA's before it is drawn down. They issue 50k into the MLIA giving most people close to what was asked for and put the rest into QAA. In QAA they have 25k of a product and by maintaining a view of the MLIA targets, they know that they can shift all of it at will at any time. So it is quite happily paying 7% into MLIA, of which 3.75% goes into customers and 3.25% goes into the PF but they are at almost no liquidity risk because they can see the entire market. If the net buy orders ever drops below say 30k (there would be 45k at the start in this example) then they could sell off a some QAA loan parts to keep their exposure small and proportionate to the net demand. This QAA really is a clever idea of AC's. By design a large proportion of the QAA is held as cash for liquidity. This means that if the QAA is holding a loan paying 7% it's unlikely to produce a surplus to go into the provision fund, as the 3.25% margin goes into paying the interest on the cash portion of the QAA.
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jonah
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Post by jonah on Jan 24, 2016 9:15:28 GMT
chris you might want to reconsider the 'no data' message for the top of the two tables on the upcoming tab to make it more user friendly. In terms of the pipeline table, there is currently one loan with docs (£140k). The author of the loan summary should get a bonus point for using the phrase teething problems considering the loan sector 
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am
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Post by am on Jan 24, 2016 9:22:04 GMT
There were BTL's in the early days at 6.5%, but I thought they came with splashback? Yes, there were 6.5% BtLs. And IIRC some came with 3.5% cashback. I have seen 6.5% BtL loan parts appear on the SM and they do disappear, but sometimes they sit for quite a while before a buyer comes along. There's been a bit of Loan #173 (6.75%) for sale today, so we know there aren't any funded buying instructions for this loan left. That loan drew down on 3/Aug/15. That just happens to be the same day that the GBBA thread was started, so the loan probably was funded before the GBBA was released and therefore may not tell us much about how the current existence of the GBBA might affect the take-up of 7% BtL loans. I wouldn't have thought it would be easy for AC to find buyers for the £500+k of 7% loans on the Upcoming list very quickly, but perhaps speed isn't an issue. As someone else pointed out, AC could use the QAA to fund those loans at drawdown, which would produce some of the earnings they need for the QAA and help build up the QAA PF. AC then could drip feed the parts onto the SM as there was demand. As I've said in the past, inventing the QAA was a stroke of genius for AC! The older BTL loans were made when property prices were low, so market risk was relatively low. Now that property prices have risen equivalent loans are less appealing without lower LTVs, or higher rates.
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agent69
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Post by agent69 on Jan 24, 2016 10:02:32 GMT
According to the website there are 11 loans due to draw down next week (January). Be interesting to see what the situation is next Sunday.
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Post by pepperpot on Jan 24, 2016 12:03:59 GMT
Yes, there were 6.5% BtLs. And IIRC some came with 3.5% cashback. I have seen 6.5% BtL loan parts appear on the SM and they do disappear, but sometimes they sit for quite a while before a buyer comes along. There's been a bit of Loan #173 (6.75%) for sale today, so we know there aren't any funded buying instructions for this loan left. That loan drew down on 3/Aug/15. That just happens to be the same day that the GBBA thread was started, so the loan probably was funded before the GBBA was released and therefore may not tell us much about how the current existence of the GBBA might affect the take-up of 7% BtL loans. I wouldn't have thought it would be easy for AC to find buyers for the £500+k of 7% loans on the Upcoming list very quickly, but perhaps speed isn't an issue. As someone else pointed out, AC could use the QAA to fund those loans at drawdown, which would produce some of the earnings they need for the QAA and help build up the QAA PF. AC then could drip feed the parts onto the SM as there was demand. As I've said in the past, inventing the QAA was a stroke of genius for AC! The older BTL loans were made when property prices were low, so market risk was relatively low. Now that property prices have risen equivalent loans are less appealing without lower LTVs, or higher rates. Also the older BTL loans were 50%LTV which at 6.5% looks better to me than 7% for 75%LTV. Although considering there's £385k of #173 fully taken up, I'm sure the upcoming crop will find a home.
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Post by chris on Jan 24, 2016 12:08:32 GMT
According to the website there are 11 loans due to draw down next week (January). Be interesting to see what the situation is next Sunday. I'm sure a couple will slip but that is the latest information entered into the system by the legal and sales teams and the third party's lawyers. That is still an estimate though so please try not to go overboard if some of the loans are delayed a week or so. We only give a specific date when funds are called.
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am
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Post by am on Jan 24, 2016 12:29:11 GMT
The older BTL loans were made when property prices were low, so market risk was relatively low. Now that property prices have risen equivalent loans are less appealing without lower LTVs, or higher rates. Also the older BTL loans were 50%LTV which at 6.5% looks better to me than 7% for 75%LTV. Although considering there's £385k of #173 fully taken up, I'm sure the upcoming crop will find a home. The pipeline has a BTL at 9.3% and 42.69% LTV. Bit close to London, but might be worth a look. (No documents as yet.)
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mikes1531
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Post by mikes1531 on Jan 24, 2016 14:27:56 GMT
In terms of the pipeline table, there is currently one loan with docs (£140k). The thing that struck me when reading the Credit Report was the date 26/Oct. At the time it was written the borrower already had agreed a purchase price for the property. So the seller has been waiting for over three months for the buyer to arrange their financing. Rather patient seller!
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sl75
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Post by sl75 on Jan 24, 2016 16:23:59 GMT
Sorry, confused the banks lending out multiples of deposited cash with the practice of only having some cash in reserve (IT director not banker). We do not lend out multiples of cash, it's £1 in and £1 out. The main thing that banks do, and which AC do not (yet) is that the borrower's bank balances are also invested in a quick access account rather than in guaranteed liquid cash... Perhaps that would be the step that would push it over the line into a different regulatory approach, so that there could be good legal reasons not to, but in terms of physical movements of cash, I see no technical barrier to prevent AC from allowing borrowers an option to sweep their "drawn down but not actually withdrawn" funds into the QAA (it would be an implementation detail whether the borrower directly received the interest, or it was automatically used towards their loan). The "money multiplier effect" you allude to would then emerge as a natural consequence.
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Post by chris on Jan 24, 2016 16:27:56 GMT
Sorry, confused the banks lending out multiples of deposited cash with the practice of only having some cash in reserve (IT director not banker). We do not lend out multiples of cash, it's £1 in and £1 out. The main thing that banks do, and which AC do not (yet) is that the borrower's bank balances are also invested in a quick access account rather than in guaranteed liquid cash... Perhaps that would be the step that would push it over the line into a different regulatory approach, so that there could be good legal reasons not to, but in terms of physical movements of cash, I see no technical barrier to prevent AC from allowing borrowers an option to sweep their "drawn down but not actually withdrawn" funds into the QAA (it would be an implementation detail whether the borrower directly received the interest, or it was automatically used towards their loan). The "money multiplier effect" you allude to would then emerge as a natural consequence. I agree there's no technical limitation stopping us. Indeed the underlying system would already support that without change it would just need an interface for the borrowers. However, as you say, I'd be amazed if we could do that within the existing regulations and our current permissions. So not something that's ever been suggested or discussed.
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agent69
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Post by agent69 on Jan 25, 2016 18:16:48 GMT
214, 225, 226 Underwriting called. Due to drawdown on Friday
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