blender
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Post by blender on Feb 11, 2014 12:35:15 GMT
I do wonder just how many Funding Circle lenders are using Autobid, and have the feeling it's probably somewhere between 80 - 90%. I appreciate this probably seems high at first glance. However, according to the recent official communications from Funding Circle, just under 6000 people have managed to take advantage of the recent double digit interest rates. Given there are now over 67,000 people lending on the platform, and that I cannot understand why anybody manually bidding wouldn't have been able to secure themselves the double digit rates in recent weeks, I can only deduce that less than 10% of platform users are in fact manually bidding. If this assumption is correct, this is a wonderful advantage for those of us who don't use Autobid. We have an army of people who will help to ensure the overall loan is funded at an interest rate acceptable to the Borrower whilst supporting our individual higher rates. We also have a ready market of potential buyers when it comes to reducing our exposure to individual loans. I just wonder how long this will last before more recent joiners of the platform get wise to this... Long may ignorance rule, I say. With rates rising as they have I have been tempted back and today took a chunk of a "B" at 12.3%. This is almost like the good old days of 12 months or more ago. If this keeps up I can meet the defaults, pay 40% tax and still turn a profit! However I must admit it is a bit too time consuming to get too involved and maybe this is another reason people turn to autobid? In mid 2013 FC stated in an interview that the split between Autobid and manual was about 50/50. It will probably have gone up a bit since then but I would think 80% too high, from the bidding. It was only a few months ago that the top bids were only 0.1% above MBR and a year ago rates were on the floor and Autobidders were preventing themselves and manual bidders from getting a return commensurate with the risk. That is why MBR was introduced. It is only recently that we who use our expertise and spare time in addition to our savings have been able to obtain good rates to offset the generally poor rates of 2013 (other than the C-). As long as the MBR autobidders make a return better than savings with no effort or skill involved, there should be no problem with others responding to FC's structural problem in funding larger loans and getting good rates, especially when cash is short. On the A loan I mentioned yesterday, which has now in pre-agreement at 9.5%, the bulk of Autobidders are in at 7.9%, without lifting a finger, while those at the auction close are in at 11.3%. If you take off the 2.6% for fees and losses, then pre-tax autobidders get 5.3% while we get 8.7%. Personally, I do not see too much wrong with that, and the opportunities may have disappeared in a month. Incidentally, autobid has not been buying on the secondary market this morning (unless you know differently). Parts that went in a flash yesterday after 2pm, have not shifted since I refreshed them at 9am. Had to fund my account for 4881, which presumably is what FC want to happen. I thought they were directing overnight repayments to the underfunded auctions, but no sign of that on 4881. A puzzle because I have sold some parts at a premium, so the secondary market is working. Probably with FC it is not the conspiracy theory that one should go with, but the other theory. Website is better, though.
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markr
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Post by markr on Feb 11, 2014 12:56:04 GMT
I do wonder just how many Funding Circle lenders are using Autobid, and have the feeling it's probably somewhere between 80 - 90%. I appreciate this probably seems high at first glance. However, according to the recent official communications from Funding Circle, just under 6000 people have managed to take advantage of the recent double digit interest rates. Given there are now over 67,000 people lending on the platform, and that I cannot understand why anybody manually bidding wouldn't have been able to secure themselves the double digit rates in recent weeks, I can only deduce that less than 10% of platform users are in fact manually bidding. You have forgotten to account for the proportion of the 67,000 who are lending but not bidding at all. I'm sure there's plenty of lenders who are withdrawing funds as they are returned, and a few zombie toe-dipper accounts where the user logs in once every Preston Guild if that.
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merlin
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Post by merlin on Feb 11, 2014 15:27:46 GMT
I sold a couple of 0%ers about an hour ago. - edit: forgot to say they went in seconds!
From stats page - 16,500 was 75% of active members = 22,000 active members in the 6months to Oct'13, I joined in July so I remember the figure then as 49,000 total members, so might be as low as 50% of the 67k that are active. Looks like you joined at the time that I largely became inactive, that is apart from selling. Hadn't had too many defaults at that point but with very much lower rates it did not make much sense if you were a higher rate tax payer to stay in. Then defaults increased and it made sense to start to retreat. Looked for a new home for my money and joined Assetz which has ended up with around half my free savings. Still have a few £k with FC and with rates rising have recently added a bit more but still worry about defaults which I can largely ignore with Assetz.
Given that most people have busy lives I guess autobid can make sense to some people but if ever I had gone that route I would make certain I set the buying criteria well above the MBR.
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Post by GSV3MIaC on Feb 11, 2014 19:50:16 GMT
I'd guess that it's a LOT Less than 50% of the registered members who are active .. nearer 10% would be my guess. May even be lower than that. 'Active' meaning doing more than just letting the income get re-invested by autobid (or pile up).
Back on the thread topic, there are currently ~20 pages of 0% markup loans (<£100 parts) sat there, so I guess autobid is either not running, or not hungry, or both. There are some 37,000 loan parts (< £40 this time, iirc) on the market, which is a heck of an overhang, compared to the end of Xmas holidays.
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oldgrumpy
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Post by oldgrumpy on Feb 11, 2014 19:59:16 GMT
FC have confirmed to me that autobid is not switched off to the secondary market, so I suppose the "slow" progress selling my "dross" (rate-wise; they've all been reliable payers) is because of the mass of choice, and people becoming more canny. SHUT THIS THREAD DOWN. IT'S GIVING THE GENERAL PUBLIC SMART IDEAS!!!  |
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blender
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Post by blender on Feb 11, 2014 21:00:11 GMT
... SHUT THIS THREAD DOWN. IT'S GIVING THE GENERAL PUBLIC SMART IDEAS!!! Hmmm. Are lenders who set and forget autobid at MBR going to look for and study an independent forum on how to optimise their portfolio? If they do take the trouble to find and use this forum then they deserve to benefit - there will always be enough MBR autobidders left. I am sure you are not really that grumpy.
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merlin
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Post by merlin on Feb 11, 2014 21:15:37 GMT
... SHUT THIS THREAD DOWN. IT'S GIVING THE GENERAL PUBLIC SMART IDEAS!!! Hmmm. Are lenders who set and forget autobid at MBR going to look for and study an independent forum on how to optimise their portfolio? If they do take the trouble to find and use this forum then they deserve to benefit - there will always be enough MBR autobidders left. I am sure you are not really that grumpy. Perhaps the banana supply has dried up as well as bidders on autobid!
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markr
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Post by markr on Feb 12, 2014 9:16:49 GMT
I've got a load of mainly A's at sub-MBR on at the moment, all £20 parts (originally) and overnight a handful of them will trickle away, so autobid is still running but there's not much spare cash around at the moment with the primary market being so full. What we need is a juicy cashback offer to tempt in some new money and get the churners churning again.
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blender
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Post by blender on Feb 12, 2014 12:11:14 GMT
It is not just the sub MBR parts which are not shifting at par through autobid. It must be quite a serious lack of cash. And now C- parts at 11.5% at par will not shift, though MBR is 11.6% of course. I would love a cashback promotion, but what FC need to do is advertise nationally, preferably on TV, to increase brand awareness and actually generate some serious cash from new customers. (That is now that I have all I want at the higher rates).
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oldgrumpy
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Post by oldgrumpy on Feb 12, 2014 12:23:40 GMT
The current situation has been caused, I think, by FC's very sudden change in loan volume. How did they abruptly change from the 2013 20-40 loans live to 80-100 loans live at any one time? Probably FC has come to an agreement with another institution (bank?) which is referring loan requests to them (for a commission, no doubt). Maybe FC didn't realise quite how many extra transactions this would involve. Has anyone noticed a particular deterioration in business quality recently? (I haven't, but do not look closely at everything).
PS I am getting a trickle of loan part sales now, bearing in mind they are at low rates, so who would really want them?
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Post by GSV3MIaC on Feb 12, 2014 13:14:48 GMT
Yep, it's gone out of kilter in the opposite direction to where it was last summer when there was too much money chasing too few loans. There is a 4% cashback (well £40, on investments of £1000 and up) for new lenders, but nothing to encourage loyal customers to put more in (which I have already complained about 'over there', since it smacks of the worst of banks and insurance companies scr*wing their loyal customers to get new ones in the door with golden hellos). Rates now are pretty attractive all round, but it must just be a matter of time before we have some loans failing to get funded .. I say attractive, but compared to rebuildingsociety's 15-20%, they still look fairly feeble.
Interestingly it seems that the A+ end of the market has floated up most - looking at FCs own stats page, the MAX marginal rates for the last 10 loans is 14.7% or something ACROSS THE BOARD .. A+ through C-, no distinction.
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blender
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Post by blender on Feb 12, 2014 14:56:56 GMT
I would not make too much of the comparison with rates at RS because their 15-20% seems to be a consequence of a failure to launch. They are only a poor copy of FC, IMO, and have failed to attract lenders and borrowers - consequently the rates are higher than they would want. Perhaps there was insufficient cash thrown into this 'me too' to provide enough incentives and advertising to buy market position against a strong market leader. (Please correct me if that is wrong).
For consumer lenders the alternative for business loans is Ratesetter, but comparisons are difficult because of its 'savings bond' offering and the provision fund. The market leadership is for FC to lose rather than competitors to achieve (IMO). FC should be splashing the cash to improve brand awareness and bring in other lending sources, rather more than the cheap member-get-member promotion. The present buying opportunities are great for some, like me, but we do worry about longer term health of our chosen platform, and particularly liquidity, which has taken a dive. When that happens people try to sell in case it gets worse, and that actually makes it worse, etc. There are some tricky positive feedback loops in the model. That's the current danger for FC, unless we are just seeing the normal seasonal pattern of consumer savings.
Is the answer to reduce loan volumes for a while? What happened to all those other corporate sources of funds which were announced in late October (I recall but cannot now find the post on the other place). The Santander money for example. New sources were supposed to be on stream as early as November, but all we have seen is a reduction in HMG money. Yes the increase in loan volume at the weakest time of year for retail savings has caused a problem, but I would think that increase is the part which has gone to plan and represents normal growth. What has so far failed is the step increase in sources of funding which should have accompanied it - and which was heralded by FC around the end of October.
Personally I am very surprised by this shortage of consumer cash - there must be plenty out there. And I am also very surprised to be worried about the liquidity of my portfolio. But I will not panic before the end of March.
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Post by valerieb on Feb 12, 2014 15:00:13 GMT
Yes, I've theoretically achieved some fantastic rates in recent auctions, and some good ones set to finish this pm, but I wonder how many of these would-be borrowers will be happy with the terms on offer? I had a dollop of cash returned last week and several loans are taking their time to drawdown.
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Post by yorkshireman on Feb 13, 2014 11:20:35 GMT
It is not just the sub MBR parts which are not shifting at par through autobid. It must be quite a serious lack of cash. And now C- parts at 11.5% at par will not shift, though MBR is 11.6% of course. I would love a cashback promotion, but what FC need to do is advertise nationally, preferably on TV, to increase brand awareness and actually generate some serious cash from new customers. (That is now that I have all I want at the higher rates). Either there is a major liquidity problem or the SM function has expired, I’ve sold nothing in the last 24 hours and my asking prices are not greedy or silly.
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oldgrumpy
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Post by oldgrumpy on Feb 13, 2014 11:25:26 GMT
I sold eight very ordinary parts since yesterday evening all to one person, probably a new auto bidder, suggesting that only new auto bidders will be able to buy because all the rest have a part of every old loan now.
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