The shape of things to come

That's a bit too crude since we know defaults are somewhat correlated with time into the loan (hence the sell at 6 month strategy, although that was really developed for 3/5 year loans). However, even with assumed no defaults, A+ does look pretty cr&ppy .. how they are going to sell those, vs (somewhat) secured property loans (10%, 1% CB, ~6 month term, for instance) boggles the mind.

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.

That statement implicitly makes so many assumptions that it seems valueless to me.

They don't specify, for example, exactly what fixed rates would have been in place since Jan 2014 under their simulations.

They're also assuming that the money from the other 29% would still have been lent on the platform, rather than taken somewhere else leaving the loans since January 2014 underfunded.

Over the years that FC have been running they have been very successful with balancing supply and demand. Some of this may be due to the auction model. Lenders initially bid high, and the loans fill up, then the higher rates get knocked off.  If there is no incentive to bid, loans may not get filled.

When YES-secure introduced their rate cap it virtually killed off a significant portion of lending overnight, and the majority of loans went unfunded.  Other lenders who only bid when the loan was near 90% full didn't lend as the loan didn't get that far!  I'm not saying that would happen for FC, as they have been infinitely better at attracting lenders.

Flippers have also provided a lot of liquidity by buying in the PM and flipping in the SM effectively helping to smooth short term supply & demand imbalances.  No there is little/no money to be made flipping, that money will go elsewhere.  Demand will have to be managed via moving rates and cash back and the supply-side more carefully managed.

The changes being made are similar to those made by Zopa and they have managed to get it to work.

I think we are hearing an awful lot from the advanced users of FC who have most to lose but I am not sure where they can switch their funds to - the relative size of FC against other platforms that retain proper bidding means that a mass switch would depress their rates too.
My success with FC has been sufficiently poor (no i didn't use autobid) that I can't see how i can lose out so I'm at this point i say 'bring it on'
Jack P