registerme
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Post by registerme on Nov 12, 2015 11:13:11 GMT
Looking at the reception of the change to fixed interest rates, the negative FC poll ratings here recently, PM concerns (the increasingly arbitrary seeming risk ratings, lack of QA, loans not being drawn down etc), SM concerns (and hence liquidity and "underwriting" issues), FC activity to get loans funded (whether with their own money and / or cashbacks, now up to 3%), and the general sentiment here to move off of FC, I wonder how much the inhabitants of this forum had the ability to enable FC to work? Was the amount of money we had collectively lent through FC, combined with our active approach to the PM and selling on the SM, just enough to support their volume growth? And is our withdrawal / winding down of our positions just enough to make that volume growth less viable?
It may only be a temporary blip ie the investment trust / ISA inflows may more than compensate in the long run but FC having to actively fund many more of the loans to get them across the line does make me wonder......
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min
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Post by min on Nov 12, 2015 13:56:18 GMT
I think one of the problems they've got is the amount of capital tied up in property loans. Whereas with amortising loans there's a steady flow of liquid capital, the more that's in property the more reliance they have on new investors joining and/or current investors putting more cash in. From the general consensus on this forum the opposite is happening- investors withdrawing cash and leaving for good.
They really need need one or two property loans to repay early to put more cash into the system.
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adrianc
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Post by adrianc on Nov 12, 2015 15:42:07 GMT
From the general consensus on this forum the opposite is happening- investors withdrawing cash and leaving for good. Many of those of us who aren't - yet - withdrawing our money are putting a higher proportion of it into those property loans, too, further bunging the works up. Basically, their current SME loans are just low return for the risk, and monumentally uninteresting. Unless, of course, you like playing E-band Russian Roulette...
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Post by davee39 on Nov 12, 2015 15:59:24 GMT
The problem is far bigger than posters here pulling out.
Even some of the smaller A+ loans are no longer filling. 8% (or 6.4% after fees and losses) makes them very unappealing - even with a bit of cashback.
Without flippers non 'E' loans have to stand on their merits, which are less than exiting for the rates available.
If FC is filling loans and dumping on the SM it becomes harder to operate a short term hold and exit strategy.
As discussed, the market is stuffed with property, with an ever greater reliance on Autobid.
The stock of unfilled loans may be holding back further listings as attempts are made to direct autobid into cleaning them up.
My overall verdict would be that this move has not been thought through and has been badly implemented. I suspect more change will follow.
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ablender
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Post by ablender on Nov 12, 2015 16:08:29 GMT
. . . . My overall verdict would be that this move has not been thought through and has been badly implemented. I suspect more change will follow. If by "more change" you mean a return to the auction/bidding/non-fixed rate that we had before, I will start getting more money in again.
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fasty
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Post by fasty on Nov 12, 2015 16:19:13 GMT
I can't see FC going back to the auction model. I also can't understand why they seem quite so terrified of letting a small percentage of loan requests fail to get funded. It would save an awful lot of bother with cashback or other means of last-minute bale-out. So, some of the applications recognised as most toxic wouldn't get funded. Surely that's good for both FC and the lenders?
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Post by Deleted on Nov 12, 2015 16:27:44 GMT
No, I don't think we have that much power, however one day there may be a tipping point when FC look back to retail as a golden age.
Are they really having problems, no I bet the board are very happy and can just switch more to Institutions if they want to.
Right now borrowers must be dead happy, if FC don't let them have their money they will fly the nest and FC will not want that, so not completing is a bad thing. One day..... maybe different.
FC will not change their strategy until they see a need to.
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nick
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Post by nick on Nov 12, 2015 17:08:12 GMT
For this business model to work they need volume, a lot of it, so unfortunately I can't see a return to the auction model - its just too resource intensive for them. I don't think active investors like us are particularly material to them as a whole. I think they will increasing court institutional money as this is by far the easiest way to ramp up volume and is far cheaper to administer.
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bigfoot12
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Post by bigfoot12 on Nov 12, 2015 17:28:22 GMT
I also can't understand why they seem quite so terrified of letting a small percentage of loan requests fail to get funded. ... Surely that's good for both FC and the lenders? I agree that letting a small number of the (seemingly) worst applications fail would be good. However, I wouldn't want to bid early on any larger loans in case my money got tied up in a fail to fund loan. And I be you and many others would be the same, many loans would only fill at the end of 7 days and some that would otherwise have filled wouldn't fill.
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registerme
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Post by registerme on Nov 12, 2015 18:31:42 GMT
The (their?) problem with the current model is that by virtue of being offered it means a potential loan has already met their lending criteria for whatever risk band it's been set at. So from FC's perspective any loan on the platform is inherently "good".
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mikeb
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Post by mikeb on Nov 12, 2015 18:44:36 GMT
My overall verdict would be that this move has not been thought through and has been badly implemented. I suspect more change will follow. Bold a) ... "been a resounding success" as it is now known ... Bold b) will occur to "further enhance your experience" no doubt.
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arbster
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Post by arbster on Nov 12, 2015 22:09:28 GMT
The (their?) problem with the current model is that by virtue of being offered it means a potential loan has already met their lending criteria for whatever risk band it's been set at. So from FC's perspective any loan on the platform is inherently "good". Sadly, I think, that's always been the case from their perspective, and borrowers. Apparently borrowers were often confused by being called to account by retail lenders (in Q&As) when the expert credit risk assessors had already "approved" them. Thus, loans have never and will never be "rejected" by the primary market. It's just inconceivable that "amateur" investors working with the minimal information provided by FC could possibly ever actually see something that had been missed by earlier processes. And this, at it's heart, is why the move to fixed rates was inevitable, and the further move to an aggregated, Zopa-style model, or a mandated Autobid approach is likely only a matter of time.
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ablender
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Post by ablender on Nov 12, 2015 22:32:37 GMT
My overall verdict would be that this move has not been thought through and has been badly implemented. I suspect more change will follow. Bold a) ... "been a resounding success" as it is now known ... Bold b) will occur to "further enhance your experience" no doubt. Do you really believe that?
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adrianc
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Post by adrianc on Nov 12, 2015 22:48:41 GMT
Bold a) ... "been a resounding success" as it is now known ... Bold b) will occur to "further enhance your experience" no doubt. Do you really believe that? I bet FC's spinmonkeys will at least sound as if they do, though.
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mikeb
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Post by mikeb on Nov 15, 2015 21:14:42 GMT
Bold a) ... "been a resounding success" as it is now known ... Bold b) will occur to "further enhance your experience" no doubt. Do you really believe that? No ... did that not come through properly?
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