jonno
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Post by jonno on Sept 10, 2015 12:45:36 GMT
Eh? Say that again an' I'll kick yer 'ead in  I spent a good few years working not far from you (round the corner from Aintree race course) so I know all your dirty little secrets. I'm not surprised you want to publicly shun them though, quite lucrative apparently. (anyway, I'm younger than you and can run faster (or at least still run) so you'd have to send one of your 10yr old 'employees' catch me first) As requested, I believe the practice still exists though in some parts of Merseyside!  Did you say you were working around here? Bloody hell, I bet you stuck out like a sore thumb. Now, about running after you; I think I'll send the Whippet 
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nick
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Post by nick on Sept 14, 2015 13:27:08 GMT
What I find interesting is how low they have set the interest rate for each Band, either they have mis-calculated or they expect passive autobidders to deploy a lot more funds or rapidly attract new investors. With the exception of D band, the fixed rates will be lower than current average rates. This will mean some (or a lot) of active investors (flippers included) will reduce or stop making investment at lower rates than they previously enjoyed. However, I would have thought demand from less active investors or auto-bidders is less elastic as an investor who previously set autobidder at a lower than average rate will not necessarily increase their investments now loans are at higher fixed rates. I had therefore expected the fixed rates to be set higher to guarantee a successful start rather than risk a shaky start. I assume the lack of new loans in the primary market in the past week is to build up demand prior to launch of fixed rates. The fixed rates will also make it more difficult for larger loans to successfully fill. It will be interesting whether they have to introduce cashback to help get some loans over the line due to liquidity conditions in the primary market. I do believe they may have underestimated the amount of liquidity flippers provide. In the absence of being able to flip to enhance returns, this money will go elsewhere making liquidity in the primary market more difficult to manage. They will be left with tweaking rates and adding cash back to manage the demand side. It will be interesting to see how things develop. However, I will most likely withdrawing most of my funds for deployment elsewhere, but keep some short term cash on the platform assuming liquidity is maintained in the SM. Ok, I think I have finally worked it out. It occurred to me that perhaps the partial loan market is less material than I though after the increase in institutional money being fed whole loans. A quick analysis of the loan book shows that in August, excluding property loans, WLs accounted for 74.9% of total loan £ volume. This is way higher than I had expected and suggests continued demand for WLs which is unaffected by the change to fixed rates will backstop any slip in PL demand. I guess the bottom line is that individual retail investors just aren't that important to them so it makes sense for them to cut the cost and burden of administrating a auction model if only a quarter and reducing proportion of investment is coming from retail.
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wysiati
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Post by wysiati on Sept 14, 2015 13:57:15 GMT
The current situation you describe is itself partly a consequence of having no property loans in the whole loans market, so any incremental institutional demand (remember there are minimum loan volume agreements in place) has necessarily been met out of the available pool of SME borrowing requests, marginalising the partial loans market share in that category.
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blender
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Post by blender on Sept 14, 2015 14:39:29 GMT
I think, Nick, that your analysis may be too short term, and that FC will be looking at making the fixed rate change now, getting it out of the way, but in the context of the anticipated market next Spring. I speak of the ISA and the FC investment trusts - both of which will be tax-efficient products aimed at their important and growing base of small consumer-lenders. The individual engaged lenders will be needed to underwrite the property loans and maybe the larger SME loans if those cannot be packaged into the SME investment trust. Autobidders should not lose from the fixed rates and will benefit from the tax changes. Flippers et al are no longer needed on the SME loans, and will either have to fight over the odd promotional bone thrown in, or must hunt elsewhere.
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SteveT
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Post by SteveT on Sept 16, 2015 8:49:31 GMT
By my reckoning there are now 63 A+ 8% property loan tranches on the SM (originally sold with CB) that no longer have discounted parts available, a figure that seems to be rising daily. Several more have just a few discounted parts at -0.1% / -0.2%. The good news is that patient flippers are seeing their par listings disappear ever faster as more tranches join that list (I'll soon be out of Exmouth 12832, and Southampton 12660 is hot to trot). The bad news is I can't see 2%CB being common in future, not at 8% anyway.
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blender
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Post by blender on Sept 16, 2015 10:10:13 GMT
By my reckoning there are now 63 A+ 8% property loan tranches on the SM (originally sold with CB) that no longer have discounted parts available, a figure that seems to be rising daily. Several more have just a few discounted parts at -0.1% / -0.2%. The good news is that patient flippers are seeing their par listings disappear ever faster as more tranches join that list (I'll soon be out of Exmouth 12832, and Southampton 12660 is hot to trot). The bad news is I can't see 2%CB being common in future, not at 8% anyway. The older ones are going at par but it is not so easy with the later ones. It is noticeable that the change to Autobid is allowing sales at modest discounts (say 0.5% on a 2% cash back loan at 8%) whereas before it was either wait for a par purchase or offer nearer 1% discount (providing say 9% buyer rate). Yes we need more at 2% cash back. It will be October before we know how things are settling.
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SteveT
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Post by SteveT on Sept 16, 2015 10:15:45 GMT
By my reckoning there are now 63 A+ 8% property loan tranches on the SM (originally sold with CB) that no longer have discounted parts available, a figure that seems to be rising daily. Several more have just a few discounted parts at -0.1% / -0.2%. The good news is that patient flippers are seeing their par listings disappear ever faster as more tranches join that list (I'll soon be out of Exmouth 12832, and Southampton 12660 is hot to trot). The bad news is I can't see 2%CB being common in future, not at 8% anyway. The older ones are going at par but it is not so easy with the later ones. It is noticeable that the change to Autobid is allowing sales at modest discounts (say 0.5% on a 2% cash back loan at 8%) whereas before it was either wait for a par purchase or offer nearer 1% discount (providing say 9% buyer rate). Yes we need more at 2% cash back. It will be October before we know how things are settling. But is the sell-through rate at -0.5% (assuming that still isn't "best available" for that loan and therefore also attracting manual bidders) really much different from the rate they'd sell at if listed at par? I doubt there are too many Autobidders that have their settings adjusted to take A+ 8.3% but not 8%, so it's really just about the number of parts listed in that loan at par or better (given that Autobid is blind to the actual rate). [or perhaps the pick-up in selling rate on the older loans with no discounted parts is simply manual bidders pitching in too]
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blender
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Post by blender on Sept 16, 2015 10:36:21 GMT
The older ones are going at par but it is not so easy with the later ones. It is noticeable that the change to Autobid is allowing sales at modest discounts (say 0.5% on a 2% cash back loan at 8%) whereas before it was either wait for a par purchase or offer nearer 1% discount (providing say 9% buyer rate). Yes we need more at 2% cash back. It will be October before we know how things are settling. But is the sell-through rate at -0.5% (assuming that still isn't "best available" for that loan and therefore also attracting manual bidders) really much different from the rate they'd sell at if listed at par? I doubt there are too many Autobidders that have their settings adjusted to take A+ 8.3% but not 8%, so it's really just about the number of parts listed in that loan at par or better (given that Autobid is blind to the actual rate). [or perhaps the pick-up in selling rate on the older loans with no discounted parts is simply manual bidders pitching in too] Not wishing to share many trade secrets, but I think that manual purchasers behaviour has been altered. However it is now more difficult to tell a manual purchase from an Autobid purchase. Manual bidders are also affected by what is available on the PM and so it is possible to know what is happening to sales but hard to say why. Autobidders tend to set their rates at whole or half percents, as evidenced by bidding patterns on the auctions, and they are now looking at buyer rates for discounted loans and so will purchase the 8% interest rate loans, which were previously forbidden, at a higher buyer rate. It is a fairer system because effectively Autobidders can take some of the benefit of the cash back on the SM. But it will need 2% cash back to work as an underwriting mechanism.
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arbster
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Post by arbster on Sept 16, 2015 11:12:00 GMT
From the latest newletter: "Autobid will automatically lend at the new fixed interest rates for all new loans listed on the marketplace, and the interest rates you currently have saved in your Autobid settings will only apply for buying loan parts on the secondary market."Perhaps I'm having a senior moment, but at present doesn't the rate set in Autobid apply to buying loan parts in both the pm and sm? And when the new fixed rates are introduced, Autobidders will be buying these fixed-rate loan parts for ALL loans listed on the pm (regardless of rate)? And the rate set by Autobidders will ONLY apply to buying loan parts on the sm? Yes, although I think people who opt to set autobid to only bid on certain rate bands will therefore only pick up PM loans for those bands. However, it does seem to mean that if you want A+ loans at 8.3% over 5 years, you'll also be getting 6-12mo ones at 6%. Doesn't sound ideal to me, so I'll probably continue to have AB switched off.
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SteveT
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Post by SteveT on Sept 16, 2015 11:54:24 GMT
Indeed. I reckon Futile Complaints are going to have a number of disgruntled Grannies wondering why their Autobid is picking up illiquid 6% 12 month loans when set to bid at, say, 9% on A+
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blender
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Post by blender on Sept 16, 2015 13:38:26 GMT
Indeed. I reckon Futile Complaints are going to have a number of disgruntled Grannies wondering why their Autobid is picking up illiquid 6% 12 month loans when set to bid at, say, 9% on A+ I think that is right but they have to get the short term property loans filled. I wonder why only Grannies (and only female?) set and forget Autobid. I hope FC tells them of the wonderful bargains to be had on the SM, at buyer rates they could only dream of on the (compulsory) PM.
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Post by nickthefool on Sept 16, 2015 14:05:19 GMT
I don't think Autobid will be bidding at lower than the rate you've set - I read it as FC just trying to clarify (badly...) that Autobid will bid at the fixed rates rather than the rate you selected in Autobid. ie if you've selected 7.5% for A+ loans, then it will bid 8% if that is the fixed rate for a particular A+ loan, but it won't bid on a 6%.
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SteveT
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Post by SteveT on Sept 16, 2015 14:10:42 GMT
I don't think Autobid will be bidding at lower than the rate you've set - I read it as FC just trying to clarify (badly...) that Autobid will bid at the fixed rates rather than the rate you selected in Autobid. ie if you've selected 7.5% for A+ loans, then it will bid 8% if that is the fixed rate for a particular A+ loan, but it won't bid on a 6%. That's certainly not what it says! "Autobid will automatically lend at the new fixed interest rates for all new loans listed on the marketplace, and the interest rates you currently have saved in your Autobid settings will only apply for buying loan parts on the secondary market."
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registerme
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Post by registerme on Sept 16, 2015 14:58:33 GMT
I really don't get it. I just sold a long term A+ SME with PG loan at a buyer rate of 7.5%, at par. It's below the rate that an equivalent loan would be under the "new scheme". I was able to immediately reinvest the proceeds into an 8%+2% cashback property loan (ie much better rate, much better security), AER is better than it would be under the "new scheme"*. I realise it takes all sorts to make up a market, but there are some people making some odd decisions. Time poor? Lack of interest? Ignorance? On a related note, and talking of the "shape of things to come", I don't really understand what FC is trying to be any more. The old model, for all its faults, at least had the benefit of being obvious. Leave aside that my returns are going to be lower, and my risk management less effective, the effect of masking complexity, for me, is actually to add to it  . Apart from institutional and ISA related inflows, what am I missing? * Assuming that property loans continue in the same way under the new scheme - either way they're unlikely to be on better terms than they are currently. |
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SteveT
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Post by SteveT on Sept 16, 2015 15:10:06 GMT
I really don't get it. I just sold a long term A+ SME with PG loan at a buyer rate of 7.5%, at par. It's below the rate that an equivalent loan would be under the "new scheme". I was able to immediately reinvest the proceeds into an 8%+2% cashback property loan (ie much better rate, much better security), AER is better than it would be under the "new scheme"*. I realise it takes all sorts to make up a market, but there are some people making some odd decisions. Time poor? Lack of interest? Ignorance? On a related note, and talking of the "shape of things to come", I don't really understand what FC is trying to be any more. The old model, for all its faults, at least had the benefit of being obvious. Leave aside that my returns are going to be lower, and my risk management less effective, the effect of masking complexity, for me, is actually to add to it . Apart from institutional and ISA related inflows, what am I missing? * Assuming that property loans continue in the same way under the new scheme - either way they're unlikely to be on better terms than they are currently. Any Autobidder with their A+ bid setting at 7.5% or below (and there are plenty that bid on every A+ auction at 6%!) could have picked that up. That doesn't make it sensible, of course. Bizarrely, the new Fixed Rate auctions will serve to protect these people from themselves.
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. Apart from institutional and ISA related inflows, what am I missing?