james
Posts: 2,205
Likes: 955
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Post by james on Jan 9, 2016 6:02:30 GMT
Don't like it at all, the slightest blip in the housing market or personal circumstances and we risk putting people into negative equity or them losing their homes, a big no no! You're really looking at this the wrong way around. The deal is not putting people into negative equity, it's making that less likely by getting them cheaper borrowing than they would have if they borrowed all 95% on a standard mortgage. That extra money they aren't spending on interest can be used for overpayments or just to increase their financial cushion level. Whether the deal is attractive to lenders is a different thing but for the borrower depending on the rates it could be extremely attractive in terms of amount of interest saved. The borrowers could perhaps do better if they had planned ahead, since a potential option would be to accumulate both savings and unsecured credit card borrowing by spending on the cards on 0% deals for as much of normal living costs as possible. It's relatively easy to build up a few tens of thousands of debt this way then use that to fund the deposit. This will not be seen as a borrowed deposit by most lenders if it was done well before a mortgage application but it will affect affordability calculations. The credit card borrowing would probably be a good deal cheaper than anything the business behind these loans is offering, given regular refinancing via balance transfer offers, assuming the amounts aren't excessive. The business here is a good one, effectively interest rate arbitrage based on lowering mortgage LTV, taking profit from traditional to make some of it for themselves and save consumers some money as well. But that's a different thing from whether it's a good deal for lenders via Ablrate on the terms offered vs other opportunities.
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Post by ablrateandy on Jan 9, 2016 7:09:26 GMT
Like others I am not going to be investing in this loan - even if I didn't think 'Northern Rock' when I read the particulars, the yield doesn't do it for me when compared to other opportunities out there. What does concern me though is the lack of notice Ablrate gave for this loan going live. I received their email at 12:41 - a whole 4 minutes before the loan went live. That frankly isn't good enough - even Moneything cut it tight but at least they guarantee 4 hours notice and often provide more.. It's open for ten days!!!! I'll come back on other points on Monday.
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Post by reeknralf on Jan 9, 2016 10:25:54 GMT
And the return rates drop as the risk increases...reminds me of 2008. So, we're being offered a collatarised debt obligation backed by a basket of sub-prime motgages? History really does repeat itself.
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ben
Posts: 2,020
Likes: 589
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Post by ben on Jan 9, 2016 11:03:44 GMT
It would have been better with a different asset class sending out an email saying this was upcoming and what the advantages/disadvantages are rather then a few mins before launch
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gt94sss2
Member of DD Central
Posts: 281
Likes: 137
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Post by gt94sss2 on Jan 9, 2016 16:55:17 GMT
What does concern me though is the lack of notice Ablrate gave for this loan going live. I received their email at 12:41 - a whole 4 minutes before the loan went live. That frankly isn't good enough - even Moneything cut it tight but at least they guarantee 4 hours notice and often provide more.. It's open for ten days!!!! ablrateandy True - but if it had proved to be a popular loan it would have been packed in a container and flown away (i.e. fully subscribed) within minutes/hours giving others no chance to even read the email, let alone transfer funds to their Ablrate accounts.. imho it would be good if Ablrate could commit to some form of minimum advance notification period
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Post by ablrateandy on Jan 9, 2016 17:01:54 GMT
There was no risk of that happening and that is why we simply got it up ASAP. The borrower has good capacity and could have increased if needed. As said before, we've learnt our lesson re good notice and this will be shown on the next loan
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Post by ablrate on Jan 11, 2016 13:46:00 GMT
Can someone clarify one thing for me. Why and how this top-up mortgage works? Why can't the borrower just get a mortgage for LTV95 from the bank? My reasoning: They are prime borrowers, so I guess they can get mortgage for the best rate (4% or less?) for the whole amount. So why to take mortgage for LTV85% for 4% and then top up with another LTV10 for much higher (6.5% + Ablrate fee + Influx fee). How can this be a good deal for the borrower. What am I missing? Hi The idea of the product is that even as a prime borrower you will pay more interest for a 95% mortgage than an 85% mortgage. However, if you put down 5% and take a top up from the borrower, your blended rate will be less than you would have got from the bank. Each loan made is assessed on this basis and only acce[ted if, inded, it is a better route for the borrower. Regards Ablrate
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Post by ablrate on Jan 11, 2016 13:49:05 GMT
And the return rates drop as the risk increases...reminds me of 2008. So, we're being offered a collatarised debt obligation backed by a basket of sub-prime motgages? History really does repeat itself. Hi To clarify, as per the docs, the loans are not sub-prime, but prime borrowers. Regards Ablrate
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ablender
Member of DD Central
Posts: 2,204
Likes: 555
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Post by ablender on Jan 11, 2016 15:38:54 GMT
Did anyone manage to find a website for this company? Can you please message me if you did?
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TitoPuente
Member of DD Central
Posts: 623
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Post by TitoPuente on Jan 11, 2016 21:34:41 GMT
Six point whatever? Not for me.
Let's go back to the 14% containers, please.
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Post by Ton ⓉⓞⓃ on Jan 11, 2016 22:45:44 GMT
I find the concept interesting, but there are several unknowns that make it too risky for me at that rate. If I knew the mortgage co or their selection criteria, but even if I assume those things to be acceptable it still feels it needs to be about double the rate offered. 6.5% to me says there will be no defaults, but with interest rates rising, possible economic woes and this being a second charge all in all this doesn't seems to add up for me.
Although I guess the SPV might be able to absorb the odd default if it's set up that way, in which case this imagined PF held within the SPV might be the profit margin for the two co's involved when it's woundup?
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Investboy
Member of DD Central
Trying to recover from P2P revolution
Posts: 564
Likes: 201
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Post by Investboy on Jan 12, 2016 13:22:49 GMT
Six point whatever? Not for me. Let's go back to the 14% containers, please. And more planes please! I joined Ablrate just for them to diversify from dodgy business, properties, gold, art and cars...
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blender
Member of DD Central
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Post by blender on Jan 12, 2016 16:07:24 GMT
Yes, these low-rate dead-safe opportunities are all very well, but I'm a greedy b*st*rd and from Ablrate I expect high-rate dead-safe opportunities.
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ablender
Member of DD Central
Posts: 2,204
Likes: 555
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Post by ablender on Jan 12, 2016 20:19:47 GMT
Yes, these low-rate dead-safe opportunities are all very well, but I'm a greedy b*st*rd and from Ablrate I expect high-rate dead-safe opportunities. Like something that flies.
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duck
Member of DD Central
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Post by duck on Jan 13, 2016 4:50:08 GMT
Yes, these low-rate dead-safe opportunities are all very well, but I'm a greedy b*st*rd and from Ablrate I expect high-rate dead-safe opportunities. Like something that flies. as opposed to something that likes flies ?
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