mikes1531
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Post by mikes1531 on Apr 15, 2016 20:10:02 GMT
I've always been mystified about why some people will invest in such low-rate loans. Some of the old BtL loans were at 50% LTV, so perhaps people really value the improved security compared to 70% LTV loans since there is no PF for those loans. But I'm still mystified by why an investor might prefer one of the current 7% loans -- where they're exposed to default risk -- to a GBBA investment that would produce the same 7% return and have the further benefits of diversified holdings and a PF. Anybody have any thoughts? As samford71 said somewhere there is a difference between yield and return. Btl could also be seen as a slightly different asset class, especially from say commercial or development property. I can see that argument, but I'd still think that the risk-adjusted return for a 75% LTV, 7% interest, BtL loan has to be less than 7% as there has to be some default risk. And I'd think that a 7% GBBA loan would have a risk-adjusted return that's closer to 7% because of the PF. There is, of course, a finite risk that the PF could be inadequate, and someone who believes that risk is significant could well prefer to invest in the BtL loan. And they certainly could value the different asset class aspect.
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Post by mrclondon on Apr 15, 2016 20:25:17 GMT
mikes1531 one other thing to bear in mind is the BTL loans are normally 5 years, whereas most other well secured loans are (only) 6 to 18 months. p2p could look very different in 2 years time, and tucking away a slice of a 5 year interest only loan now might turn out to be a very prudent decision.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Apr 18, 2016 12:34:11 GMT
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Post by Butch Cassidy on Apr 18, 2016 12:38:42 GMT
New investors & new money get all the extras; Loyal long term investors get precisely nothing - sounds more like the good old banks everyday 
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mikes1531
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Post by mikes1531 on Apr 18, 2016 12:59:28 GMT
New investors & new money get all the extras; Loyal long term investors get precisely nothing - sounds more like the good old banks everyday The last time AC did a promotion like this aimed at new investors -- about two years ago IIRC -- they followed it a month or two later with a cashback offer for existing investors. Keep your fingers crossed that they do a repeat of that!
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stevio
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Post by stevio on Apr 18, 2016 21:03:15 GMT
Is this a good deal? I've been wary of AC in the past due to the problems I have seen reported on this forum and also a cursory look at AC 6 months ago showed lots of loans in trouble-is this still the case? How do they compare in return, defaults and risk to SS, AB, FS and MT? Is a 12% return realistically achievable onAC? Are loans generally secured? Do they have to do the 3% because they are struggling to attract new business?
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Apr 18, 2016 21:56:43 GMT
Is this a good deal? I've been wary of AC in the past due to the problems I have seen reported on this forum and also a cursory look at AC 6 months ago showed lots of loans in trouble-is this still the case? How do they compare in return, defaults and risk to SS, AB, FS and MT? Is a 12% return realistically achievable onAC? Are loans generally secured? Do they have to do the 3% because they are struggling to attract new business? There are still a considerable number of loans in distress, some of these are just extended refinancing at default rates, but there are 8 with LPA in place and the majority of those are unlike to produce a full recovery IMO and result in capital losses. All loans are asset secured, mostly on property, mixture of SME, commerical mortgage, development, BTL & bridges, but some on debtors, contracts, WIP etc . 12% return is unlikely, rates range from 7-12% with the majority these days being sub 10%. They do have a very strong pipeline though loans are relatively small compared to SS, generally sub £1m. LTV up to 80% but usually 70% or less. No PF on normal lending. They do offer a quick access account paying 3.75% with PF (c30-50% held as cash) and 7% fund (autobid diversifying) with PF focussing on property secured loans, which offer options different to other platforms. PF targetting 5% coverage though some way off. So with cashback thats 6.75% on potential low risk liquidity (cash has FSCS potection) or 10% on medium risk hands off (under normal market conditions). Difficult to compare with MT, SS for defaults as theyve done 250+ loans, probably slightly higer risk, definately lower average rate for new investors. SM fairly liquid, though can vary on a loan by loan basis, slightly distorted by current inbuilt bias for selling by quick access account Dont think they are struggling to attract new business particularly, they have 3 major institutional investors and 10,000 retail lenders. There is a deliberate policy of ensuring plenty avaliable at the moment as they went through a prolonged loan drought which undoubtably discouraged new investors. Have a look here for the sort of range of loans in the pipeline p2pindependentforum.com/thread/4278/assetz-pipeline-loans?page=1
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Post by chris on Apr 19, 2016 6:40:28 GMT
Is this a good deal? I've been wary of AC in the past due to the problems I have seen reported on this forum and also a cursory look at AC 6 months ago showed lots of loans in trouble-is this still the case? How do they compare in return, defaults and risk to SS, AB, FS and MT? Is a 12% return realistically achievable onAC? Are loans generally secured? Do they have to do the 3% because they are struggling to attract new business? There are still a considerable number of loans in distress, some of these are just extended refinancing at default rates, but there are 8 with LPA in place and the majority of those are unlike to produce a full recovery IMO and result in capital losses. All loans are asset secured, mostly on property, mixture of SME, commerical mortgage, development, BTL & bridges, but some on debtors, contracts, WIP etc . 12% return is unlikely, rates range from 7-12% with the majority these days being sub 10%. They do have a very strong pipeline though loans are relatively small compared to SS, generally sub £1m. LTV up to 80% but usually 70% or less. No PF on normal lending. They do offer a quick access account paying 3.75% with PF (c30-50% held as cash) and 7% fund (autobid diversifying) with PF focussing on property secured loans, which offer options different to other platforms. PF targetting 5% coverage though some way off. So with cashback thats 6.75% on potential low risk liquidity (cash has FSCS potection) or 10% on medium risk hands off (under normal market conditions). Difficult to compare with MT, SS for defaults as theyve done 250+ loans, probably slightly higer risk, definately lower average rate for new investors. SM fairly liquid, though can vary on a loan by loan basis, slightly distorted by current inbuilt bias for selling by quick access account Dont think they are struggling to attract new business particularly, they have 3 major institutional investors and 10,000 retail lenders. There is a deliberate policy of ensuring plenty avaliable at the moment as they went through a prolonged loan drought which undoubtably discouraged new investors. Have a look here for the sort of range of loans in the pipeline p2pindependentforum.com/thread/4278/assetz-pipeline-loans?page=1Expected losses across the portfolio remain around 1% against average returns of 10-11%. I don't know much about MT but SS do not have an aged loan book so you can't really compare like for like. The majority of SS loans have yet to see the borrower repay a penny of capital, with the lenders lending themselves interest for the first year and some now refinancing that into a second year with lenders lending themselves some more interest.
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SteveT
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Post by SteveT on Apr 19, 2016 7:15:49 GMT
Expected losses across the portfolio remain around 1% against average returns of 10-11%. I don't know much about MT but SS do not have an aged loan book so you can't really compare like for like. The majority of SS loans have yet to see the borrower repay a penny of capital, with the lenders lending themselves interest for the first year and some now refinancing that into a second year with lenders lending themselves some more interest. Fair points, but of course AC is quite happy to lend on the same basis. I'm sure I have a slice of a £6m AC loan for a Scottish estate where I'm lending myself the interest for 18 months 
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Post by Butch Cassidy on Apr 19, 2016 7:35:11 GMT
Is this a good deal? I've been wary of AC in the past due to the problems I have seen reported on this forum and also a cursory look at AC 6 months ago showed lots of loans in trouble-is this still the case? How do they compare in return, defaults and risk to SS, AB, FS and MT? Is a 12% return realistically achievable onAC? Are loans generally secured? Do they have to do the 3% because they are struggling to attract new business? I'm not a fan of cash back (on any platform), I prefer solid long term returns based on the risk/reward of the actual loans; A new investor starting now would likely only achieve single figure returns going forward but in the short term this 3% boost would most likely make that competitive. Medium/longer term the MLIA (manual decision based investing) will struggle to out perform the automated GBBA account (7% + PF protection, increased liquidity, preferential allocations, less time consuming) given the extra risks involved & the rates available. AC are clearly targeting a mass market, lower rate audience to compete more with RS/Zopa than their higher rate competitors (& in my view as a shareholder this will be good for growth & most likely make them a long term P2P platform winner).
Although as ilmoro states there are still a considerable number of loans in distress, I am more optimistic about recovery (although I'm not exposed to any of the 8 LPA) I have always been selective on quality first rather than just rate so have avoided the real stinkers, AC have so far proved themselves good in recovery, although it often takes much longer than anticipated (partly due to AC dragging their feet but largely evasive borrowers & lawyers who clearly charge by the day) & I am certain that their experience has helped tighten the contracts/security they consider going forward. Security is often solid but as loans are suspended regardless investors have to wait for their money until the process completes.
AC are certainly not struggling as they have large institutional credit lines to call on but they are changing & trying to attract a different risk profile of investor & this on going process is still to achieve the perfect balance, overall I like AC, rate their management & they have a very professional proposition which will undoubtedly lead to a successful future but are there better places for a selective risk taker to invest - probably but it all depends on your attitude to risk & the amount of time you have available.
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Post by chris on Apr 19, 2016 7:38:19 GMT
Expected losses across the portfolio remain around 1% against average returns of 10-11%. I don't know much about MT but SS do not have an aged loan book so you can't really compare like for like. The majority of SS loans have yet to see the borrower repay a penny of capital, with the lenders lending themselves interest for the first year and some now refinancing that into a second year with lenders lending themselves some more interest. Fair points, but of course AC is quite happy to lend on the same basis. I'm sure I have a slice of a £6m AC loan for a Scottish estate where I'm lending myself the interest for 18 months I'm not saying it's not a valid way of lending, and naturally it's a part of our portfolio. My point was that you can't make a like for like comparison on default and loss rates until a good portion of those loans have actually had borrower repayments come in.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 11,330
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Post by ilmoro on Apr 19, 2016 7:44:25 GMT
There are still a considerable number of loans in distress, some of these are just extended refinancing at default rates, but there are 8 with LPA in place and the majority of those are unlike to produce a full recovery IMO and result in capital losses. All loans are asset secured, mostly on property, mixture of SME, commerical mortgage, development, BTL & bridges, but some on debtors, contracts, WIP etc . 12% return is unlikely, rates range from 7-12% with the majority these days being sub 10%. They do have a very strong pipeline though loans are relatively small compared to SS, generally sub £1m. LTV up to 80% but usually 70% or less. No PF on normal lending. They do offer a quick access account paying 3.75% with PF (c30-50% held as cash) and 7% fund (autobid diversifying) with PF focussing on property secured loans, which offer options different to other platforms. PF targetting 5% coverage though some way off. So with cashback thats 6.75% on potential low risk liquidity (cash has FSCS potection) or 10% on medium risk hands off (under normal market conditions). Difficult to compare with MT, SS for defaults as theyve done 250+ loans, probably slightly higer risk, definately lower average rate for new investors. SM fairly liquid, though can vary on a loan by loan basis, slightly distorted by current inbuilt bias for selling by quick access account Dont think they are struggling to attract new business particularly, they have 3 major institutional investors and 10,000 retail lenders. There is a deliberate policy of ensuring plenty avaliable at the moment as they went through a prolonged loan drought which undoubtably discouraged new investors. Have a look here for the sort of range of loans in the pipeline p2pindependentforum.com/thread/4278/assetz-pipeline-loans?page=1Expected losses across the portfolio remain around 1% against average returns of 10-11%. I don't know much about MT but SS do not have an aged loan book so you can't really compare like for like. The majority of SS loans have yet to see the borrower repay a penny of capital, with the lenders lending themselves interest for the first year and some now refinancing that into a second year with lenders lending themselves some more interest. Excluding rollovers, extensions & morphs, ISTM SS have repaid more loans than AC. AC have issued more loans, about 2:1. SS have lent more. Lendy themselves have been lending since early 2013 but SS didnt launch until Nov so 6 months after AC, with PBL starting a year after AC. Difficult to compare short term bridging finance with longer term SM lending (AC yet to run a 3yr loan to term) but where there are comparisons BL, retained interest, IMO AC record is not as good. Both platforms have a place in my portfolio for diversity.
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Post by chris on Apr 19, 2016 7:53:11 GMT
Is this a good deal? I've been wary of AC in the past due to the problems I have seen reported on this forum and also a cursory look at AC 6 months ago showed lots of loans in trouble-is this still the case? How do they compare in return, defaults and risk to SS, AB, FS and MT? Is a 12% return realistically achievable onAC? Are loans generally secured? Do they have to do the 3% because they are struggling to attract new business? I'm not a fan of cash back (on any platform), I prefer solid long term returns based on the risk/reward of the actual loans; A new investor starting now would likely only achieve single figure returns going forward but in the short term this 3% boost would most likely make that competitive. Medium/longer term the MLIA (manual decision based investing) will struggle to out perform the automated GBBA account (7% + PF protection, increased liquidity, preferential allocations, less time consuming) given the extra risks involved & the rates available. AC are clearly targeting a mass market, lower rate audience to compete more with RS/Zopa than their higher rate competitors (& in my view as a shareholder this will be good for growth & most likely make them a long term P2P platform winner).
Although as ilmoro states there are still a considerable number of loans in distress, I am more optimistic about recovery (although I'm not exposed to any of the 8 LPA) I have always been selective on quality first rather than just rate so have avoided the real stinkers, AC have so far proved themselves good in recovery, although it often takes much longer than anticipated (partly due to AC dragging their feet but largely evasive borrowers & lawyers who clearly charge by the day) & I am certain that their experience has helped tighten the contracts/security they consider going forward. Security is often solid but as loans are suspended regardless investors have to wait for their money until the process completes.
AC are certainly not struggling as they have large institutional credit lines to call on but they are changing & trying to attract a different risk profile of investor & this on going process is still to achieve the perfect balance, overall I like AC, rate their management & they have a very professional proposition which will undoubtedly lead to a successful future but are there better places for a selective risk taker to invest - probably but it all depends on your attitude to risk & the amount of time you have available.
Just to clarify, the GBBA holds no increased liquidity or preferential allocations vs MLIA. That may change as we do have the tools to skew the market but that is the current state of play. With regard to us "dragging our feet" in recovery, that is a large part of why our recovery rates have been so good. There are legal processes to follow that if we were to try and shortcut them could let the borrower off the hook and leave lenders with large losses. Otherwise I broadly agree with you. We don't have a strategy of focussing on RS / Zopa with lower rates, the plan is still to cater to all lender types as best as our origination allows us to with some higher rates loans being part of the mix as and when we find those of suitable quality.
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Post by chris on Apr 19, 2016 7:58:49 GMT
Expected losses across the portfolio remain around 1% against average returns of 10-11%. I don't know much about MT but SS do not have an aged loan book so you can't really compare like for like. The majority of SS loans have yet to see the borrower repay a penny of capital, with the lenders lending themselves interest for the first year and some now refinancing that into a second year with lenders lending themselves some more interest. Excluding rollovers, extensions & morphs, ISTM SS have repaid more loans than AC. AC have issued more loans, about 2:1. SS have lent more. Lendy themselves have been lending since early 2013 but SS didnt launch until Nov so 6 months after AC, with PBL starting a year after AC. Difficult to compare short term bridging finance with longer term SM lending (AC yet to run a 3yr loan to term) but where there are comparisons BL, retained interest, IMO AC record is not as good. Both platforms have a place in my portfolio for diversity. Our record with bridging loans has not been where we wanted it to be, skewed by one batch of difficult loans from a single broker we don't work with any more. That was the original batch of 6 month bridging loans. Exclude those and our track record has been very good. SS's home page stats suggest ~£23m has been repaid thus far but a good portion of that (over 50% if my casual observance of the platform and dodgy memory is correct) have been on platform refinances where the borrower hasn't repaid any capital.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Apr 19, 2016 9:51:09 GMT
Excluding rollovers, extensions & morphs, ISTM SS have repaid more loans than AC. AC have issued more loans, about 2:1. SS have lent more. Lendy themselves have been lending since early 2013 but SS didnt launch until Nov so 6 months after AC, with PBL starting a year after AC. Difficult to compare short term bridging finance with longer term SM lending (AC yet to run a 3yr loan to term) but where there are comparisons BL, retained interest, IMO AC record is not as good. Both platforms have a place in my portfolio for diversity. Our record with bridging loans has not been where we wanted it to be, skewed by one batch of difficult loans from a single broker we don't work with any more. That was the original batch of 6 month bridging loans. Exclude those and our track record has been very good. SS's home page stats suggest ~£23m has been repaid thus far but a good portion of that (over 50% if my casual observance of the platform and dodgy memory is correct) have been on platform refinances where the borrower hasn't repaid any capital. Yes, you can drop that figure by just under half. I make it 11.8m repaid on terminated PBL (21.8m on site) which excludes rollovers & non-drawdowns (SS includes the later) plus about £1m on boats - so 12.8m. I make AC to have repaid £ 17.4m 20.7m on terminated loans. SS have repaid c45 loans (23 PBL & 20-25 boats), AC c 40.41 (usual exclusions) Take your point on bad apples, though most bridging loans have required some form of extension/rolled over but ISTM that is to be expected. On Butchs point about 'dragging feet' there are times when it seems AC are very reluctant to go to formal default procedures despite loans being weeks in arrears (7 day grace period banner on some loans is a bit of a joke when a late payment hits a month overdue) but time will tell whether their more tolerant 'fairer' approach yields positive results or prolongs the agony. Not really an issue on SS as they seem to be able to get borrowers to cover interest if required. (so far)
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