Rob
Posts: 138
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Post by Rob on Aug 15, 2015 14:31:06 GMT
If you go to Loan Listings and select Primary Market, you can then select individual loans. If you then select Investment Breakdown, you can see all the individual investments that have been made. But also, it lists investors that have their loan share on the Secondary Market. I cannot see the point in this as this is supposed to be a sub-menu of the Primary Market. Furthermore, this page only shows the borrower's interest rate and not the Yield To Maturity (YTM) which is vital to know when buying on the secondary market. Also, if you don't select Investment Breakdown when you go to the loan page, you are faced with an investment button which will (maybe unwittingly) purchase Mintos (& Mogo, etc.) (at par) and Secondary Market (at premium) shares together (so it would appear).
Mintos shares are, I agree, Primary up until the point at which a monthly payment has been made. But after this, surely these are now Secondary as the interest you will get if you buy them will not be the same as the borrower's rate as part of the capital has been repaid. Therefore, I think that Mintos (& Mogo, etc.) shares should show a YTM figure too so that you can see the actual yield that you will receive.
Following on from this, Auto Invest only purchases Mintos (& Mogo, etc) shares. You can only filter for the borrower's interest rate. As Auto Invest will scan all available loans when you first set it up, I think that you should be able to filter by YTM as Mintos loans that are more than one month old will not yield the borrower's interest rate so this is of less interest.
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Post by reeknralf on Aug 15, 2015 16:59:00 GMT
It is not true to say that the interest rate changes once some capital has been repaid. The ratio of interest:capital in each payment decreases, as the loan is paid off, but the interest rate is unchanged. Perhaps you could give some illustrative numbers to show what you mean?
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james
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Post by james on Aug 16, 2015 3:58:15 GMT
Why does the yield to maturity change just because some time has passed? Just making a payment makes no difference the interest rate has not changed, just the amount of capital being sold on which that interest rate is being paid.
If there is a secondary market charge paid by buyer or seller it would be lower because of this charge. Yield to maturity also changes if the price is not par or if accrued interest is not paid to the buyer. If any of these applies it is important to see the YTM.
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Rob
Posts: 138
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Post by Rob on Aug 16, 2015 16:17:44 GMT
It is not true to say that the interest rate changes once some capital has been repaid. The ratio of interest:capital in each payment decreases, as the loan is paid off, but the interest rate is unchanged. Perhaps you could give some illustrative numbers to show what you mean? Yes, you are right. I thought that you gained more interest for the capital owed by holding the loan for the first part of its term than if you bought it later on in the term. It certainly looks that way if you look at the payment schedule. But now I have done some maths on a fully amortised sample, I see that the interest rate on the remaining capital stays constant over time. If there is a secondary market charge paid by buyer or seller it would be lower because of this charge. Yield to maturity also changes if the price is not par or if accrued interest is not paid to the buyer. If any of these applies it is important to see the YTM. Yes, I have found some examples of par loans older than one month for sale on the secondary market and the YTM is the same as the borrower's interest rate. Thanks to both of you for putting me straight. It stems from an inaccurate posting I read on Bondora some time ago. Also, if you don't select Investment Breakdown when you go to the loan page, you are faced with an investment button which will (maybe unwittingly) purchase Mintos (& Mogo, etc.) (at par) and Secondary Market (at premium) shares together (so it would appear). Having played with the site some more, I find that this button will fill your loan amount with the least marked-up shares first i.e., if there are still Mintos shares at par, it will give you these first. What is mis-leading is that it shows you the average premium of all shares for sale until after you press it.
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james
Posts: 2,205
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Post by james on Aug 16, 2015 23:40:32 GMT
It stems from an inaccurate posting I read on Bondora some time ago. Bondora has a charge for the seller and does not pay the seller accrued interest so it is necessary to know the YTM there. The accrued interest slowly makes a loan a better deal for a buyer until the next payment is made, then the value drips and the cycle starts again. Also a charge for the seller.
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JamesFrance
Member of DD Central
Port Grimaud 1974
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Post by JamesFrance on Aug 17, 2015 10:22:26 GMT
Mintos has a 1% charge for the seller on the secondary market, but no other charges for investors since they cancelled the service charge they had at the beginning.
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Post by martins on Aug 17, 2015 13:32:50 GMT
We accrue interest, delayed interest, and late payment fees on daily basis proportionate to each investor’s investment in the loan. Thus, seller on the Secondary Market (and also on the Primary Market, but in this case seller is a loan originator) will receive interest (and delayed interest and late payment fees, if any) from the next payment proportionate to the days he/she has held the loan part.
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