littleoldlady
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Post by littleoldlady on Dec 16, 2015 22:50:57 GMT
So we (lenders) are still covered, no? Only if the asset can be sold and sold for enough... But in that case the borrower would probably not go bust - unless it was due to something unrelated to the value of the asset.
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littleoldlady
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Post by littleoldlady on Dec 16, 2015 23:02:52 GMT
I understand that since inception SS has returned 12% as the one default was handled promptly without a loss. However, we have been in a very benign environment - rising property prices, low and stable interest rates (for refinancing). When there is an economic downturn - probably soon, now that I am on board  - more defaults will happen and recovery will probably not be 100%. So what is your expectation of net long term returns from SS? Surely low interest rates generally are bad for p2p and our rates will become more attractive when base rate goes up. I agree that a fall in property prices is the danger, as the Irish experience shows. Recovery does not need to be 100%, merely the LTV figure. In some cases the money borrowed will have been spent on improving the site thus lowering the LTV. And then there is the PF, although I cannot find the value of this on the new site. We would all like to know the answer to your question! My strategy is to diversify and keep my fingers crossed.
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jonah
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Post by jonah on Dec 17, 2015 6:51:52 GMT
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Dec 17, 2015 10:33:50 GMT
Doh. I should have gone to Sp.....
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Post by boomorbust on Dec 17, 2015 11:19:24 GMT
I assume 8% after bad debts. 12% so far :-)
Time will tell if my assumption holds!
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ramblin rose
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“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Dec 17, 2015 13:40:45 GMT
I understand that since inception SS has returned 12% as the one default was handled promptly without a loss. However, we have been in a very benign environment - rising property prices, low and stable interest rates (for refinancing). When there is an economic downturn - probably soon, now that I am on board - more defaults will happen and recovery will probably not be 100%. So what is your expectation of net long term returns from SS? Surely low interest rates generally are bad for p2p and our rates will become more attractive when base rate goes up. I agree that a fall in property prices is the danger, as the Irish experience shows. Recovery does not need to be 100%, merely the LTV figure. In some cases the money borrowed will have been spent on improving the site thus lowering the LTV. And then there is the PF, although I cannot find the value of this on the new site. We would all like to know the answer to your question! My strategy is to diversify and keep my fingers crossed. I'm not of the opinion that higher base rates will lead to higher p2p rates, unless they were to get very high, and that really isn't likely to happen any time soon; I think p2p rates are at their high point and will get lower as the concept matures - we've already seen that starting to happen in some cases. As such it's been my attitude that I'm making hay while the sun shines, and in a year or two my investing will probably look quite different to how it does today. Regarding recovery values required, it goes beyond the basic LTV figure, sometimes a fair way beyond, because there are costs associated with recovery and they mount up as the recovery time extends, especially if you take into account accruing interest (because you will be losing out if your capital ends up not earning anything in interest for that period of time). Those costs can mount up surprisingly quickly.
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- more defaults will happen and recovery will probably not be 100%. 
