blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Jul 2, 2015 13:11:33 GMT
Parts on offer at just 1.9% premium at present.
On the £168k loan a good chance of early taking. When first filled the average rate will be around 19%, with potential to improve just to 18.2% - and with FC's fixed fees on top. However, there will be plenty of flipping competition.
Presumably this new E category is intended to grow the loan book - which is still below half a billion outstanding, and to increase the headline average rate advertised, which will respond quickly under the recent method of calculation (projected from the latest 'n' hundred loans agreed). This headline rate will have been kept down by property at 8%, and its increase will hopefully attract more lenders.
|
|
wysiati
Member of DD Central
Posts: 397
Likes: 86
|
Post by wysiati on Jul 2, 2015 13:28:56 GMT
FC have long been accused (by GSV amoung others iirc) of fiddling with the criteria for each band intermittently in order to give the impression of knowing what they are doing. Eg. If a risk band is well below its expected default rate; let in a bunch of riskier loans and vice versa... I'm sure GSV would do a better job of explaiing than I and probably have something to back it up with. By 'fiddling' are you suggesting nefarious activity? The credibility of the risk bands (remember there is a range of borrower scores within each risk band) in part comes down to the platform delivering the projected rates of bad debt within some reasonable margin of error. FC's policy IIRC is to manage things to achieve those predicted rates of bad debt. To that end, just as one would expect evolution of the credit model, there might be varying outputs in how a given business would be classified e.g. over a cycle. There might be short term extreme imbalances where it is tempting to open the floodgates but any contrivance is likely to be reflected in the data and could harm that sought after credibility. There are now enough risk bands to cover anything investible, or near to it, and there should not be any need to stuff a particular risk band with extra offerings to meet any form of quota. The only quotas I am aware of are the minimum volume agreements with one or more institutional investors operating in the whole loans market.
|
|
coop
Member of DD Central
Posts: 714 
Likes: 571
|
Post by coop on Jul 2, 2015 13:34:52 GMT
That's all very well and good; but shouldn't investors know the parameters of each risk band and be informed when those parameters are changed?
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Jul 2, 2015 13:36:51 GMT
I agree with Wysiati and have said before that the only definition of the bands is the expected loss rate. Therefore FC can, with experience, adjust the secret formulae for entry to bands in order to make the actual loss rate conform to the expected. Either way of course. Not fiddling, but adjusting. I have expressed concern about the A+ not being homogeneous, but property and non-property which might have different loss performances.
|
|
adrianc
Member of DD Central
Posts: 10,014
Likes: 5,143
|
Post by adrianc on Jul 2, 2015 13:38:31 GMT
That's all very well and good; but shouldn't investors know the parameters of each risk band and be informed when those parameters are changed? Have we _ever_ known the parameters of each risk band? No, we've never been told what they are. Just the order and the expected default rates. If those expected defaults changed, we'd be told (I assume). We're all happy investing on that basis, right? If we weren't, we wouldn't be here. Meanwhile, they continue Fiddling with Calculators to sort the applications into bands in whatever way they feel like doing.
|
|
TitoPuente
Member of DD Central
Posts: 624
Likes: 655
|
Post by TitoPuente on Jul 2, 2015 13:53:11 GMT
13924 is a victim of this shambolic risk banding. It could have been an A+. I doubt it will be accepted even at MBR.
|
|
coop
Member of DD Central
Posts: 714
Likes: 571
|
Post by coop on Jul 2, 2015 14:09:36 GMT
Yeah doesn't look much wrong with that one.
I'm also beginning to worry for 13880 - it filled at MBR yesterday but not accepted and nothing on repayments tab yet. If it filled at the lowest possible rate why the delay in taking up the loan?
|
|
wysiati
Member of DD Central
Posts: 397
Likes: 86
|
Post by wysiati on Jul 2, 2015 14:13:40 GMT
I'm also beginning to worry for 13880 - it filled at MBR yesterday but not accepted and nothing on repayments tab yet. If it filled at the lowest possible rate why the delay in taking up the loan? Borrowers only get advised of their given risk band at the time of listing. At 18.2%pa + fees wouldn't you want to make absolutely certain there are no alternatives?
|
|
SteveT
Member of DD Central
Posts: 6,875
Likes: 7,924
|
Post by SteveT on Jul 2, 2015 14:21:13 GMT
I'm also beginning to worry for 13880 - it filled at MBR yesterday but not accepted and nothing on repayments tab yet. If it filled at the lowest possible rate why the delay in taking up the loan? Borrowers only get advised of their given risk band at the time of listing. At 18.2%pa + fees wouldn't you want to make absolutely certain there are no alternatives? Maybe they're having an udder think!
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Jul 2, 2015 14:36:15 GMT
13924 is a victim of this shambolic risk banding. It could have been an A+. I doubt it will be accepted even at MBR. I said above that it could be taken early because of lack of scope for improvement. But they are not answering the questions and if unhappy with the banding the cash could be locked up for a week and then rejected.
|
|
coop
Member of DD Central
Posts: 714
Likes: 571
|
Post by coop on Jul 2, 2015 14:40:19 GMT
I'm also beginning to worry for 13880 - it filled at MBR yesterday but not accepted and nothing on repayments tab yet. If it filled at the lowest possible rate why the delay in taking up the loan? Borrowers only get advised of their given risk band at the time of listing. At 18.2%pa + fees wouldn't you want to make absolutely certain there are no alternatives? Fair point; I think I would have said not to bother listing it! Could probably do better on a couple of credit cards!
|
|
TitoPuente
Member of DD Central
Posts: 624
Likes: 655
|
Post by TitoPuente on Jul 2, 2015 14:45:53 GMT
13924 is a victim of this shambolic risk banding. It could have been an A+. I doubt it will be accepted even at MBR. I said above that it could be taken early because of lack of scope for improvement. But they are not answering the questions and if unhappy with the banding the cash could be locked up for a week and then rejected. There is always the scenario in which they will draw down as soon as it fills because they are desperate for the cash for a reason not immediately evident in the papers. If this is the case, then it will be an E after all.
|
|
am
Posts: 1,495
Likes: 601
|
Post by am on Jul 2, 2015 14:55:19 GMT
13924 is a victim of this shambolic risk banding. It could have been an A+. I doubt it will be accepted even at MBR. Good credit rating, decent profit margin and ROCE, accounts "only" 3 months old; the only obvious negative point is it's rather highly geared. One wonders what rate they're paying for invoice discounting if a FC loan at 18.2% is cheaper. Risk bands are supposed to represent expected losses, not expected default rates, so will reflect FC's opinion of the worth of directors' guarantees, which I suspect account for some of the discrepancies between FC's rate banding and what the commentariat think.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Jul 2, 2015 15:00:19 GMT
I said above that it could be taken early because of lack of scope for improvement. But they are not answering the questions and if unhappy with the banding the cash could be locked up for a week and then rejected. There is always the scenario in which they will draw down as soon as it fills because they are desperate for the cash for a reason not immediately evident in the papers. If this is the case, then it will be an E after all. It's good to have an 'optimistic' view. If that happens then I think it will be safe up to just before the second repayment.
|
|
|
|
Post by nightmare on Jul 2, 2015 15:01:12 GMT
I wonder if there may be a few fingers burnt on 13924, a few of the smaller flippers went in straight away at the minimum and it's still only 61% full after over 3 hours. Of course there is plenty of time to go but I wouldn't like to say for certain that it will close at the minimum.
|
|
