blender
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Post by blender on Jan 16, 2016 11:19:42 GMT
I thought I would have a quick look at recent loans in the loan book (by loan number), as posted on Saturday 16th Jan and therefore covering (approximately) the latest loans drawn down by close on Friday 15th.
64 loans were offered as whole loans and one E was rejected to join the 36 offered as partial to make 37 partial and 63 whole.
Two thirds of loans are currently being offered as whole loans
5% of loans were interest only property development, and randomly allocated to whole or partial. Better accuracy, if needed, would come from a larger sample.
The split of the loans by band was
A+ 42
A 27
B 11
C 10
D 6
E 4
Over 40% of the loan applications are currently rated A+ and over two thirds are A or better. It would be good to know why this is. Does it reflect the distribution of borrowers wanting loans through FC, and better options elsewhere for those who would be rated more lowly by FC? ie FC caters for a better class of borrower. Or does FC currently have lower entry standards for its bands than before?
Note that as a proportion of the whole loan book A+ is 26% and A or A+ is 58%. This is in the context of a book which started with A+, A, B, and gradually added C and D and E over the years, where you would expect the percentage to reduce. But of course we have also had the large secured property loans going into the book as A and A+. The bands are defined only by the expected loss rate over all the loans in the band.
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oldgrumpy
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Post by oldgrumpy on Jan 16, 2016 12:05:39 GMT
Although I have indicated that I "like" the last post, that is not because I like what it reveals. It confirms the reasons (in addition to enforced fixed rates) why I am progressing my "controlled" exit from Fallable Crumblings.
Why would I accept 5-8.5% (after fees) for unsecured lending on the new style A+/A risk loans when I can get 9-10+% from AC with considerable (but not infallible) security, and 12% with security and (arguably) more risk on other platforms?
Is it possible to extract a list of 100 consecutive loans offered in 2015 (before auctions ceased), 2014, 2013 etc and show the % in each risk band there? I bet it wouldn't
be 69% A+/A in 2015, 2014, 2013!
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blender
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Post by blender on Jan 16, 2016 12:58:32 GMT
Hi Grumps. Without wishing to spend too much time number crunching, I have looked at the short period between the start of the E band and the start of the fixed rates, which is not really long enough to eliminate the effects of the loan number order not being the draw down order, but the following is an analysis of the middle 100 loans, 13934 to 14041:-
A+ 22
A 27
B 20
C 10
D 11
E 10
Not long ago but radically different. Of course things may be different again in a week - we shall see, though we have to be careful, in that we do not have draw down dates in the book and some in my 100 may have been listed two weeks ago, and some on Friday.
However, I think we should be aware that you can put A+ lipstick on a pig, but it is still a pig (or whatever species you personally prefer to denigrate).
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Post by GSV3MIaC on Jan 16, 2016 13:23:31 GMT
Well that was always doomed to happen wasn't it - as soon as risk band directly controlled the rate (i.e. end of auctions) suddenly there is a much bigger incentive to fiddle the band(s), with nothing the lenders can do (apart from not lend) to help themselves. That's why I'm headed for the door too (apart from some secured property with CB, and some short term D/ Es .. neither of which are much in evidence right now).
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blender
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Post by blender on Jan 16, 2016 13:51:48 GMT
Well that was always doomed to happen wasn't it - as soon as risk band directly controlled the rate (i.e. end of auctions) suddenly there is a much bigger incentive to fiddle the band(s), with nothing the lenders can do (apart from not lend) to help themselves. That's why I'm headed for the door too (apart from some secured property with CB, and some short term D/ Es .. neither of which are much in evidence right now). Quite so. Once we were lenders and it was p2p; now we are investors and they are taking the p. We are expected to p2p off, but a slight qualification in case the ISA offering is attractive.
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blender
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Post by blender on Jan 16, 2016 15:13:46 GMT
Fiddlers in Funky Chimps' band? Surely not!  |
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oldgrumpy
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Post by oldgrumpy on Jan 16, 2016 15:26:09 GMT
Hi Grumps. Without wishing to spend too much time number crunching, I have looked at the short period between the start of the E band and the start of the fixed rates, which is not really long enough to eliminate the effects of the loan number order not being the draw down order, but the following is an analysis of the middle 100 loans, 13934 to 14041:- A+ 22 A 27 B 20 C 10 D 11 E 10 Not long ago but radically different. Of course things may be different again in a week - we shall see, though we have to be careful, in that we do not have draw down dates in the book and some in my 100 may have been listed two weeks ago, and some on Friday. However, I think we should be aware that you can put A+ lipstick on a pig, but it is still a pig (or whatever species you personally prefer to denigrate). Thank you blender That looks very similar to what I would have guessed. It's not worth anyone spending much time to prove or disprove earlier estimates, but my guess for the spread in mid 2014 over a 100 consecutive loan offerings would be: A+ >10 A 10 B 30 C 35 D <10 From the week following the introduction of fixed rates people have been commenting on the very sudden change in risk band rating decisions. 69% A/A+ as a current figure represents to me a blatant change of policy ... but which policy?I wonder where all the missing C and D and E borrowers eventually went ..... (if they did  )
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Post by captainconfident on Jan 16, 2016 18:57:04 GMT
You mean, Old G, that these A/A+ ers might actually be the C, D and Es of previous year? Certainly looked that way to me when I looked at some of the finances pages.
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metoo
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Post by metoo on Jan 16, 2016 22:30:45 GMT
Here’s a chart of % of accepted SME loans in each risk band since Funky Chimps began to play. Secured property loans and WLs are left out. A+ has risen for about 2 years. Overall for 1 Sep 2010 - 31 Dec 2015, | A+ | A | B | C | D | E | | 15% | 30% | 26% | 21% | 8% | 1% |
 Edit: with apologies to blender for borrowing the Funky Chimps' band. |
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registerme
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Post by registerme on Jan 16, 2016 22:57:25 GMT
Looking back at this post, and all I feel is disappointment. With perhaps a smidgeon of embarrassed naivety  . |
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blender
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Post by blender on Jan 16, 2016 23:07:13 GMT
Here’s a chart of % of accepted SME loans in each risk band since Funky Chimps began to play. Secured property loans and WLs are left out. A+ has risen for about 2 years. Overall for 1 Sep 2010 - 31 Dec 2015, | A+ | A | B | C | D | E | | 15% | 30% | 26% | 21% | 8% | 1% |
A co-incidence of course that the loss-free A+ property loans have also been increasing for about two years. Fortunate, though, that the property loans will be offsetting any increased loss in the A+ SME's and helping to keep the band overall below 0.6% pa. Good for business, too.
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metoo
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Post by metoo on Jan 16, 2016 23:11:00 GMT
Here’s a chart of % of accepted SME loans in each risk band since Funky Chimps began to play. Secured property loans and WLs are left out. A+ has risen for about 2 years. Overall for 1 Sep 2010 - 31 Dec 2015, | A+ | A | B | C | D | E | | 15% | 30% | 26% | 21% | 8% | 1% |
A co-incidence of course that the loss-free A+ property loans have also been increasing for about two years. Fortunate, though, that the property loans will be offsetting any increased loss in the A+ SME's and helping to keep the band overall below 0.6% pa. Good for business, too. Just pure coincidence. And fortunate, so long as...
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metoo
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Post by metoo on Jan 16, 2016 23:28:45 GMT
Looking back at this post, and all I feel is disappointment. With perhaps a smidgeon of embarrassed naivety . I don't want to be cynical. But we are asked to take a lot on trust. Ultimately, only sound management will be good for the business, so let's hope it's all good and no daft decisions. Aspirations are high, and there must be pressure too. Is there an equivalent to caveat emptor for investing?
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registerme
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Post by registerme on Jan 16, 2016 23:31:42 GMT
Yep. It's called caveat emptor.
I don't think anybody round here will have a problem with cynicism. That having been said, I think most of those round here are broadly supportive of, and optimistic about, the "innovative finance" sector. Sound management, beyond that, exceptional management, is something we should all hope for, and yet sometimes what counts as that for a business does not count the same for investors (or lenders). FC are walking that line right now.
If I were an FC shareholder I'd be applauding. I'm not.
Respect, for me, is a word bound up by what is said, and why it is said; what is thought, and why it is thought; and most importantly what is done, and why it is done.
As a lender, unfortunately, they've lost my respect.
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SteveT
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Post by SteveT on Jan 17, 2016 8:58:08 GMT
Whenever I need reminding why I stopped investing in FC SME loans (bar short-term Russian Roulette with Ds and Es) l simply look back at 10851, a £200k A+ loan that made 6 repayments before going phut, now projected to repay 14p in the £ over 5 years ... if we're lucky.
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