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Post by longjohn on Sept 30, 2015 9:57:42 GMT
If too much money is chasing too few loans, then rates will fall so Forget Chasing. Indeed, Check out 15973 one of the last variable rate loans and closes 12:47 today. It's an A and would be 9.5% at fixed rate. It's currently 8.2% (less than a A+) with a top bid of 9%. They are a very lucky company. When there are no new available loans to bid on people get desperate and try to put their money somewhere/anywhere.
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bigfoot12
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Post by bigfoot12 on Sept 30, 2015 18:20:01 GMT
I let Autobid do its thing today and I got some of most of the loans I was aiming for. Missed out on some of the smallest loans, but that's okay.
A question for the future: if my autobid is buying £40 chunks and at some point in the future I have £20 in my account will it buy a £20 chunk or will it wait until my account has £40 in it?
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Post by aloanatlast on Oct 3, 2015 7:41:20 GMT
If too much money is chasing too few loans, then rates will fall so Forget Chasing. In the cabbage market of Economics 101, if there are too many cabbages and not enough buyers, the price of cabbages falls, and the buyers then think, cabbages are cheap today, I'll buy more.
Real markets are rarely that elastic. On FC, there was no mechanism for borrowers to think, the money is cheap today, I'll have more.
So the lenders would chase rates to rock bottom, and at the end of the day the amount of money lent out was no more than it was going to be anyway.
The auction system was never a way to find the balance point between lenders and borrowers - auctions aren't markets in that sense. The auction was just a way for lenders to compete to shoot themselves in the foot.
Even in the longer term, it was virtually impossible to translate lower rates into more borrowing. And so we got minimum bid rates.
There's no need for FC to reduce rates if there's too much money. Excess money earning 0% automatically reduces the overall average anyway, while being conveniently ignorable in the stats.
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blender
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Post by blender on Oct 3, 2015 8:19:04 GMT
If too much money is chasing too few loans, then rates will fall so Forget Chasing. In the cabbage market of Economics 101, if there are too many cabbages and not enough buyers, the price of cabbages falls, and the buyers then think, cabbages are cheap today, I'll buy more.
Real markets are rarely that elastic. On FC, there was no mechanism for borrowers to think, the money is cheap today, I'll have more.
So the lenders would chase rates to rock bottom, and at the end of the day the amount of money lent out was no more than it was going to be anyway.
The auction system was never a way to find the balance point between lenders and borrowers - auctions aren't markets in that sense. The auction was just a way for lenders to compete to shoot themselves in the foot.
Even in the longer term, it was virtually impossible to translate lower rates into more borrowing. And so we got minimum bid rates.
There's no need for FC to reduce rates if there's too much money. Excess money earning 0% automatically reduces the overall average anyway, while being conveniently ignorable in the stats.
I thought that if there were insufficient buyers for cabbages then they get buried in landfill - the cabbages that is. Otherwise agreed. FC is not a market in itself, more like a broker. There was also no way that the auction could set rates according to risk. Apart from providing the platform and managing the transactions, the added value which FC provides and wishes to profit from is the ability to assess risk and set rates accordingly. Originally through the banding, then through minimum and maximum rates per band (the maximum being managed by diversion to whole loans) and then by fixing rates per loan. From a business perspective the ability to assess risk for the various business classes, to set appropriate rates and to manage collections to achieve loss rates is the valuable intellectual property which is being built up by FC to be exploited worldwide. They are not going to be jerked around by a few lenders (like me) who wish to continue to profit from short term imbalances in supply and demand, and a mismatch between the model and loan sizes. The performance of the UK loan book against loss rate targets is too important to allow that.
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Post by aloanatlast on Oct 3, 2015 8:32:17 GMT
I suppose, in a way, they could never guarantee you get part of every loan, as there is probably too much Autobid money available, so they have to randomly allocate it. When Autobid wakes up from its little nap and processes your account, it'll buy everything going that meets your criteria. If there's nothing going because it's already bought everything, tough. I very much doubt if it'll have organised a lottery to give you a chance.
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bigfoot12
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Post by bigfoot12 on Oct 3, 2015 9:14:45 GMT
I suppose, in a way, they could never guarantee you get part of every loan, as there is probably too much Autobid money available, so they have to randomly allocate it. When Autobid wakes up from its little nap and processes your account, it'll buy everything going that meets your criteria. If there's nothing going because it's already bought everything, tough. I very much doubt if it'll have organised a lottery to give you a chance. Do you think a) auto bid sleeps (for a couple of hours ?) then wakes processes transactions for everyone and then sleeps again, or b) auto bid slowly process a few people per second, (taking about 2 hours), and then starts again from the beginning? My guess is something more like (b) as I have been watching carefully over the last few days and I have not seen a sudden jump in loan bids that I would expect to in case (a). Slowly cycling through a long list is a bit like the random allocation described by arbster.
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Post by aloanatlast on Oct 3, 2015 9:24:53 GMT
There was also no way that the auction could set rates according to risk. Apart from providing the platform and managing the transactions, the added value which FC provides and wishes to profit from is the ability to assess risk and set rates accordingly. But still they'll tell us the lender should decide, even though the decision is now reduced to yes/no and even though most lenders use Autobid. Power to the Lender has always been the excuse for not having a compensation fund. So now we're marooned in space - they've taken us halfway to Planet Zopa with no intention of either taking us back home or taking us the rest of the way.
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blender
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Post by blender on Oct 3, 2015 9:48:40 GMT
There was also no way that the auction could set rates according to risk. Apart from providing the platform and managing the transactions, the added value which FC provides and wishes to profit from is the ability to assess risk and set rates accordingly. But still they'll tell us the lender should decide, even though the decision is now reduced to yes/no and even though most lenders use Autobid. Power to the Lender has always been the excuse for not having a compensation fund. So now we're marooned in space - they've taken us halfway to Planet Zopa with no intention of either taking us back home or taking us the rest of the way. More like they have changed the orbit of planet FC to one which is sustainable - as close to the p2p sun as it is practical to be and to live within planetary resources available to an operator who does not take a reward for risk. We, and the institutions, can still choose our loans and benefit (or lose) from our choices without being forced to take the provision fund. Planet Zopa is on an outer, icier orbit. The investment trust(s) will compete with Zopa. I do not think I can fault the vision and strategic plan which I infer from FC's actions and statements. Personally I would like some shares. But as lenders we have to decide if the new offering still matches our needs. Another week as they ramp up the deal flow on the partial board will help to answer the questions. They are being very cautious in implementing this key change, probably after the fiasco of MBR in 2013 - which the CEO cannot afford to repeat.
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Post by GSV3MIaC on Oct 3, 2015 20:11:47 GMT
But they have lost, and continue to lose, lender trust and street cred by promising XYZ (which they fail to deliver) and the delivering ABC (which nobody actually asked for), while claiming transparency and listening to the customers. Examples:
a) The much delayed API open beta.
b) The improved financial data in the downloadable loan book (currently none).
c) The new improved forum (still broken)
d) The fixes for the website (fixed by basically canning all the functionality they couldn't get to work).
e) The repairs/fixes to reconciling everyone's accounts (OK, so going forward we won't have dropped out bids, (not sure about purchase glitches on the SM) but the historic data is still screwed up to the point an accountant would have a meltdown).
f) Any bugs fixes to the website (SM pages have never worked right or reliably, IME) .. got to where most users won't even bother to report them.
They consistently fail to make any actual commitments on most things, citing (quite correctly) the fact they always fail to meet them. I guess the switch to fixed rates was one thing that happened on time.
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blender
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Post by blender on Oct 3, 2015 21:45:37 GMT
But they have lost, and continue to lose, lender trust and street cred by promising XYZ (which they fail to deliver) and the delivering ABC (which nobody actually asked for), while claiming transparency and listening to the customers. Examples: a) The much delayed API open beta. b) The improved financial data in the downloadable loan book (currently none). c) The new improved forum (still broken) d) The fixes for the website (fixed by basically canning all the functionality they couldn't get to work). e) The repairs/fixes to reconciling everyone's accounts (OK, so going forward we won't have dropped out bids, (not sure about purchase glitches on the SM) but the historic data is still screwed up to the point an accountant would have a meltdown). f) Any bugs fixes to the website (SM pages have never worked right or reliably, IME) .. got to where most users won't even bother to report them. They consistently fail to make any actual commitments on most things, citing (quite correctly) the fact they always fail to meet them. I guess the switch to fixed rates was one thing that happened on time. The decision to move to fixed rates must have been made at least a year ago - just the timing and the implementation plan to be finalised. They need it done for the ISA and the investment trusts which will not be pitched to the relatively few lenders who have been upset by the list of non-deliveries above, many of whom they knew they would be losing anyway. Apart from e), which is simpler to fix in the fixed rate environment, the things in the list do not trouble their future key lender types (investors). FC no longer need auctions or the early-adopter lenders who wish to have auctions. Getting the IT costs under control by avoiding the fixing of functionality or the developing of new functionality which will not be needed on the voyage (a-d) looks like sensible management. Now that fixed rates have been announced and implemented we can expect more rationalisation coming from a focus on the future requirements of consumer-lenders, investor-types who do not wish to use their time, and institutions. They do listen, but they do not do what lenders tell them to do (they made that mistake with mbr, imo). Lenders or investors are really just a source of funds, the borrowers are the true customers.
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registerme
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Post by registerme on Oct 3, 2015 21:47:50 GMT
If I was running FC I'd be doing exactly what they are doing. I'm not, I lend(t) through them, so I am doing exactly what I am doing.
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Post by GSV3MIaC on Oct 4, 2015 8:11:47 GMT
The decision to move to fixed rates must have been made at least a year ago - just the timing and the implementation plan to be finalised. That was rather my point .. they have spent a year stringing us along with promises they knew perfectly well they were never going to deliver on, because the game plan was to replace us with other funding sources and a different business model, but they had to keep us on board until they didn't need us any more. That is not the sort of long term, trust building, relationship I personally would be looking for. YMMV.
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blender
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Post by blender on Oct 4, 2015 9:04:58 GMT
The decision to move to fixed rates must have been made at least a year ago - just the timing and the implementation plan to be finalised. That was rather my point .. they have spent a year stringing us along with promises they knew perfectly well they were never going to deliver on, because the game plan was to replace us with other funding sources and a different business model, but they had to keep us on board until they didn't need us any more. That is not the sort of long term, trust building, relationship I personally would be looking for. YMMV. We are punters, not partners. Such decisions are need-to-know even within the company. I think some of those old promises were kicked into the long grass long ago. YMMV? Your mileage may vary, your method may vary, you make me vomit? I hope not.
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Post by GSV3MIaC on Oct 4, 2015 16:12:30 GMT
Traditionally "Your Mileage May Vary" (and, in the case of VW, your emissions too, apparently).
Yes, I know about commercial secrecy, but 'being economical with the truth' doesn't impress me much.
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blender
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Post by blender on Oct 4, 2015 16:44:00 GMT
It would be interesting to know when the forum administrators were told about the change to fixed rates etc. I imaging a staff meeting not long before the public announcement. Mentioning VW is apposite. They set new low standards for transparency and honesty, and compliance. Compared with that for a trusted brand of enormous value, FC come up smelling of roses. The damage to the VW group will be comparable with BP - but at least that was an accident, not a deliberate fraud.
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