oldgrumpy
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Post by oldgrumpy on Mar 31, 2014 12:12:22 GMT
While FC keep piling in auctions to keep 110+ live auctions people are going to pick and choose, leaving many loans with high rates (and more chance of rejection by the prospective borrower). It is not helped by FC listing large second loans with no asset security despite the cumulative business total loan far exceeding their own £150K limit, then slapping down lenders who query it in the Q and A - and doing nothing about it, not even an explanation. Only one question has survived, presumably purely because of the way it is phrased. 5678
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Post by GentlemansFamilyFinances on Mar 31, 2014 12:20:34 GMT
The number of loans on offer is becoming a joke - how are you supposed to do any DD? If you are not into flipping - you shouldn't be investing in FC.  I don't like all these property loans. Property is in a bubble - most property developers I've met are thick as cow <beep> - and we're the ones on the hook if their Pwoperdee Get Rich Quick scheme fails to materialise? Any I pick up (yes I Auto-Bid) I dump. |
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Post by GentlemansFamilyFinances on Mar 31, 2014 12:24:01 GMT
To improve liquidity - FC would be better offering bonuses to lenders. The old cashback was great - but what is needed is something like a 2% bonus for increased lending over a period of time. Increase from May-July by £10,000 get £200 (probably in Amazon Vouchers  ) but it would have a better impact than the £40 introductory bonus or a 2% per auction winning bid amount. |
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jimbo
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Post by jimbo on Mar 31, 2014 12:26:16 GMT
A cashback promo could work well if they only redeem it following a set lock-in period; say 3 months. If they follow previous cashback templates, the secondary market would more likely choke up even further with the loan parts of people trying to flip to release the money so thry can churn it through yet another cashback round. This would be self-defeating in the short term under the current circumstances. I have no idea if FCs system is set up to work for a lock-in related cashback offer though, so please take this speculation on my part with a pinch of salt. I have no idea what they'll do. I just think the present illiquidity in the SM will force them to try something in the new tax year. Any lock-in would be a no-no for me and I'm not sure it would help to fill new loans. FC need a lot of new money from somewhere otherwise rates will be sticking at 13% plus. Actually, didn't I read something on the official forum last year about some corporate funding coming in to replace/add to the government money? Speaking for myself, I don't have enough in FC to lose me any sleep at night, so I'd jump at any offer of a lockin-related cashback deal, providing the lockin period is not too onerous. I could live with 3 months, and I'm sure I wouldn't be the only one. If such an offer came along, I'd be prepared to potentially double my investment in Funding Circle for as long as an abundance of gross rates on loan parts >= 10% pa remain...
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Post by aloanatlast on Apr 1, 2014 5:48:25 GMT
Actually I'm not clear how Autosale works. Does it put loan parts onto the visible market, or does it hand them directly to Autobid? Are the parts visibly not selling at par all put there by hopeful manual sellers?
Of course there were always the 4% bidders who could only sell to each other. Now, there are 11.6% bidders who can only sell to each other. Most of what's offered at par has always been overpriced. If Autobid doesn't buy those parts, nobody else will. The only way to get those parts sold will be to fix Autobid so it always buys them (to the detriment of the new owners). The state of the rest of the market hardly seems relevant.
What's changed is that the average new lender, looking for say 200 x £20 loan parts, no longer has to go fishing in the dregs to build his portfolio in less than a year. Autobid can lend his money in a fortnight - and without buying any rubbish, if it chooses to. There's no longer a case for buying inferior loan parts just to get the money lent faster - that part of the old model was only a passing phase. As the market grows to the size where everybody is spoilt for choice, we're moving towards a point where there will be a going rate for each risk band and nothing will sell very far off the going rate.
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blender
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Post by blender on May 1, 2014 22:24:26 GMT
Time for an update to this thread. Today the number of unsold loan parts at par or a discount has gone down to just on 10,000. This compares with 20,000 just before and just after the 1%, and 25,000 during it. This 10,000 should be seen in the context of the 48 loan requests, compared with around 100 during the peak of the borrower-side promotions. Now the loan requests and the level of business is back where it was in late 2013, which is good news for no-one, but then there was no liquidity problem - while now there still is. Looking at the distribution of the 10,000 by band, it is approximately C- 1k, c 4k, B 2k A 2.5k and A+ 0.5k. C- loan parts are now shifting again slowly at par at 11.5% (refresh regularly) and the main stickers seem to be the C loan parts. Possibly the liquidity problems have rattled lenders (including me) and the C problem may be the legacy of the depressed rates for C in much of 2013, and the increase in MBR making them look a poor part to hold. Those 4k are nearly all below current MBR, even after some discounting. Personally I will not hold any loan part below current MBR, for fear of illiquidity.
Let us hope that current FC initiatives for sustainable growth are successful - it is in all our interests.
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Post by aloanatlast on May 2, 2014 7:20:38 GMT
Of course the whole-loan market is now running. I don't think we know how many loans are listed on it, but it would look silly if they started with two or three and they all went in half an hour, so I expect they've launched with a splash.
Existing lenders won't mind if Autobid is starved of new auctions until the backlog clears.
But the great days of 14% may be over for new lenders. Now, the dilemma of whether to keep all the high-rate loan parts, or trade them in for lower-rate or higher-risk parts.
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Post by davee39 on May 2, 2014 8:12:59 GMT
Of course the whole-loan market is now running. I don't think we know how many loans are listed on it, but it would look silly if they started with two or three and they all went in half an hour, so I expect they've launched with a splash.
Existing lenders won't mind if Autobid is starved of new auctions until the backlog clears.
But the great days of 14% may be over for new lenders. Now, the dilemma of whether to keep all the high-rate loan parts, or trade them in for lower-rate or higher-risk parts. My guess is that any Solid Business would be insane to keep paying 14% on a loan when 10% might currently be available. The only problem with re-financing would be where the loan is the max unsecured £150k. I have sold out of a few on this assumption, but of course I could be wholly wrong. Meanwhile I am resisting the temptation to bid on anything at silly rates (Which means bidding on very little at the moment). It seems strange that after launching property with a big fanfare there has been no follow up loan, perhaps we are being deliberately starved to build demand for a load of rubbish businesses coming soon!
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blender
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Post by blender on May 2, 2014 8:20:44 GMT
Of course the whole-loan market is now running. I don't think we know how many loans are listed on it, but it would look silly if they started with two or three and they all went in half an hour, so I expect they've launched with a splash. I had not considered that the whole loan trial is might already be taking loans. It starts from 1 May, so yesterday was day 1, and there were 9 ordinary loans. You may be right. We will just have to watch the loan book for loans agreed which are not in the loan requests.
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) but it would have a better impact than the £40 introductory bonus or a 2% per auction winning bid amount.
