Unusual amount of bad debt

Paused loans are not defaulted or bad debt.  It just means they are behind with their repayments (or are about to repay the entire loan).  Sometimes borrowers are able to catch up, sometimes not.  In the latter case, the SECURITY is sold to repay lenders.  How many other P2P sites do that? 

I think you will find on closer examination that AC offers one of the best return/risk investments in the market.

That's the more recent hijacking of the term Default by others in the P2P industry.  Technically a default is any breach of contract, which could include things like the LTV of the property moving outside a defined range even if the repayments are fully up to date.

Other platforms have focussed on default rates as for the most part a default for them is usually followed by a loss.  The (financial) industry standard way to view things is a combination of Probability of Default and the Loss Given Default.  Our PoD may be higher than our competitors but the LGD is lower due to the strength of security in a typical loan.  Last year we had zero losses and this year we're predicting around a 0.5% loss.  This is on the back of well over 10% average returns in both years.

As a made up example if your PoD is 10% but your LGD is 5%, your actual losses should be 0.5%.  Whereas if your PoD is 4% but your LGD is 50% then your losses would be 2%, four times higher despite the theoretically better default rate.

I am very wary of lending on loans where all the principal is to be paid back as the last payment, with regular payments being interest only. In principle, I feel these loans are very susceptible to last-minute failure either because a redevelopment project overruns (as they all do), or because a property couldn't be sold, or just because the borrower never intended to pay back the capital on time. There used to be more amortizing loans on AC, and I feel AC should put strong pressure on borrowers to take out amortizing loans rather than interest only, helping to spread risk across the life of the loan. Maybe lower rates could be charged for amortizing loans to encourage responsible repayment... I know these are businesses, not punters who need protecting from themselves, but human nature is human nature...