sl75
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Post by sl75 on Oct 7, 2015 16:51:15 GMT
It is a random process according to FC. That suggests that 80% of non-property loans are going as whole loans. Perhaps we shouldn't assume that random means an equal probability of a loan being offered as a PL or WL. Maybe False Connotations is assigning loans randomly as PL or WL but now in a 1:4 ratio. Reminds me of someone at school who couldn't get his head around probability - would say the probability of just about anything was 50% because "either it happens or it doesn't".
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mikeb
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Post by mikeb on Oct 7, 2015 17:36:25 GMT
It is a random process according to FC. Now is that the dictionary definition of "Random process" or the FC definition, as used on the secondary market a while ago? Where "random" meant "a queue you need to be at the head of, or get buried in the latest listed loan parts" ... Hmmm ??
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blender
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Post by blender on Oct 7, 2015 18:53:30 GMT
Was not assuming equally. The ratio of whole to full has always been set by FC and is not equal. The randomness is in which loan is chosen to be the next whole or partial loan. Property loans are excluded from whole loans and so for a 73/27 split between whole and partial, the business loans will have an even higher chance of going whole. I think FC are deliberately starving the partial board of SME loans at the moment. Probably trying to get us used to lower cash back on property. Does this mean a greater number of rejected WLs will be reaching a smaller PL market, increasing our exposure to defaults? Thanks, FC. You may think that.
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arbster
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Post by arbster on Oct 7, 2015 20:30:54 GMT
Does this mean a greater number of rejected WLs will be reaching a smaller PL market, increasing our exposure to defaults? Thanks, FC. You may think that. I was assured that the institutions do not get to cherry pick the WLs.
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SteveT
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Post by SteveT on Oct 7, 2015 20:48:22 GMT
They don't get to cherry-pick from the full list of loans, but it's true that any loans offered as WLs and NOT taken up are then re-offered as PLs (I think these are the occasional loans that unexpectedly appear mid-morning). So, as the balance shifts ever more towards WLs, the "WL rejects" must inevitably represent a greater share of the PLs that remain.
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SteveT
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Post by SteveT on Oct 8, 2015 7:09:42 GMT
Interesting to look at the profile of money flowing into the 4 big A+/A CB-less loans from Tuesday afternoon (courtesy of the FCVIz Chrome extension; each circle represents total bids made in half-hour blocks of time). This plot is of 16297 but those for the other 3 are pretty much identical. Presumably Autobid hit its 65% limit around noon yesterday, after 3 concerted bursts of activity and 2 long naps in between; since then, the average bid rate has been £100 - 200 per hour. This particular one needs another £58k in 125 hours to fill or about £460 per hour. Perhaps it will pick up again each morning / evening and over the weekend (but it needs to).  |
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arbster
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Post by arbster on Oct 8, 2015 7:22:18 GMT
They don't get to cherry-pick from the full list of loans, but it's true that any loans offered as WLs and NOT taken up are then re-offered as PLs (I think these are the occasional loans that unexpectedly appear mid-morning). So, as the balance shifts ever more towards WLs, the "WL rejects" must inevitably represent a greater share of the PLs that remain. Thanks for the clarification. In the interests of transparency, I think FC should tell us if a PL has been rejected by the WL market. I think I'll ask.
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SteveT
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Post by SteveT on Oct 8, 2015 7:30:41 GMT
They don't get to cherry-pick from the full list of loans, but it's true that any loans offered as WLs and NOT taken up are then re-offered as PLs (I think these are the occasional loans that unexpectedly appear mid-morning). So, as the balance shifts ever more towards WLs, the "WL rejects" must inevitably represent a greater share of the PLs that remain. Thanks for the clarification. In the interests of transparency, I think FC should tell us if a PL has been rejected by the WL market. I think I'll ask. You can tell after the event from the loan book. The rejected WLs have "WL" in the whole_loan column and a number rather bigger than 1 in the num_loan_parts column
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arbster
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Post by arbster on Oct 8, 2015 7:34:16 GMT
Thanks for the clarification. In the interests of transparency, I think FC should tell us if a PL has been rejected by the WL market. I think I'll ask. You can tell after the event from the loan book. The rejected WLs have "WL" in the whole_loan column and a number rather bigger than 1 in the num_loan_parts column I'd rather like to know before I bid on it. Sadly it's probably too early to tell whether rejected WLs have a higher than average rate of default.
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Post by transo on Oct 8, 2015 7:50:30 GMT
You can tell after the event from the loan book. The rejected WLs have "WL" in the whole_loan column and a number rather bigger than 1 in the num_loan_parts column I'd rather like to know before I bid on it. Sadly it's probably too early to tell whether rejected WLs have a higher than average rate of default. I asked that when they first introduced whole loans. I was assured that this would be made clear to all investors before they bid; which gets added to the long list of commitments that they failed to honour.
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arbster
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Post by arbster on Oct 8, 2015 8:12:22 GMT
Well, that was interesting. | 1 Year | PLs | PLs (Rejected WLs) | WLs | | Default | 0.33% | 1.08% | 0.42% | | Late | 0.58% | 0.94% | 0.30% | | Repaying | 94.56% | 92.85% | 95.31% | | Repaid | 4.53% | 5.13% | 3.97% |
| Since WLs started | PLs | PLs (Rejected WLs) | WLs | | Default | 0.77% | 1.61% | 0.68% | | Late | 0.72% | 0.81% | 0.33% | | Repaying | 91.17% | 90.59% | 93.63% | | Repaid | 7.35% | 6.99% | 93.63% |
So, it appears that professional institutions somehow "get lucky" when picking which WLs they take, and are definitely not just better at due diligence than FC's team... |
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registerme
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Post by registerme on Oct 8, 2015 8:47:48 GMT
How many loans in total does that cover arbster, and how do the numbers stack up if you strip out the property loans made available to the PL market? |
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arbster
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Post by arbster on Oct 8, 2015 8:53:36 GMT
Bit busy for too much analysis, but briefly, if you take out the property loans that's a total of 8186 loans (broken down as 3380 PL, 1115 rejected WL, 3691 WL) and the default rates become 0.86%, 1.61% and 0.68% respectively. You wouldn't expect the latter two numbers to change, of course, but it does make the PL default rate look even more out of line.
Also worth noting that 25% of SME loans on the marketplace are rejected WLs. Buyer beware.
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arbster
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Post by arbster on Oct 8, 2015 9:00:36 GMT
I believe that it is the risk assessment and therefore the loss rate per band which adds value to FC's offering. Institutions are probably not doing a further layer of due diligence, just selecting. This does give comfort that the WL rejections may not be on the basis of risk. So on what basis do you think those institutions are "selecting" such that they get a significantly lower default rate than on the loans they accept? And if so, how do I do that...?
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adrianc
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Post by adrianc on Oct 8, 2015 9:01:37 GMT
At a very rough and non-expert first glance, that seems to say that there's no bias in passing "better" loans to WL, if anything slightly the other way. If we take the initial-PL figures as an average of the WL and Rejected-WL-then-PL, then it really does seem to be a more-than-fair split for PL buyers.
The one message that screams out is that WL buyers don't reject loans for no reason...
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