Funding Circle change lending model

But the loan volume is a tiny fraction, isn't it?

As far as I can tell FK is only nominally running loans as reverse auctions, a reserve rate is published and 90+% of accepted bids are at the reserve, with most of the remaining 10% being late-stage bidders who bid 0.01% lower. So I consider it to be fixed-rate like the new FC model. And with lower rates than the new FC model, though probably lower default rates too.




 

You'll have to unpack that statement.

I could be alone on this thought (it wouldn't be the first time), but whilst ignoring to active minority of investors like the forum followers, flippers etc, Samir has overlooked the fact that many of us have actively promoted FC to others who are not active in the community but still invest.

He sees a handful of names on the forum and thinks hey ho...just a few that the rigged FC stats will marginalise. But it is far easier to recommend people NOT to join FC than it is to recommend....which will be my new line.

The mail documentation points out that less loans will be rejected as the borrower can be certain of the rate and that's good for lenders. This may well morph into pre-acceptance of loans which will also be better for lenders. 

On the other side of the coin, if at the moment, a loan is not going to be filled, normally because the proposition is unattractive, then the active investors swoop in with a high rate offer commensurate with the risk and the loan gets filled. So I surmise that more loans will remain unfilled than before, particularly at the current advertised rates,  and that's got to be a bad thing.

Of course, it may be that FC then top it up (although that would appear to me to be very unethical), but if all the active investors steer clear of a loan request and FC tops it up, that's a quick journey to the knackers yard.  

But it is broke!!!

The number of loans available is limited and large loans (> £200k) are hard to get away because they end at high rates.

FC really do not want to mess about with £6000 tax bills, they want the £500k loans to build income and reach profitability.

I dont like it, especially as I am currently running at 12.7% return, but I cannot get more than pennies invested if there are no new loans available (while maintaining diversity).

I do think the rates are too low, but the 75 -ve votes (including mine) are hardly going to tip the balance.

Imagine 200 or 300 loans a week at auction, the system could not cope, and even a wholly new IT structure might struggle.

And good look pulling out and going elsewhere, the 12% offers are all constrained by excess demand.