registerme
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Post by registerme on Apr 1, 2016 14:42:33 GMT
Until I can use a Zopa / RS / whatever account with a) better interest than the QAA and b) the ability to sweep into and out of MLIA it's kind of a moot point though.
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Post by chris on Apr 1, 2016 15:06:13 GMT
QAA serves a different purpose to Zopa or RS's access accounts, with a structural focus on liquidity and cash reserves allocated to providing it. Both the other accounts require a purchaser for you to be able to exit and, at least as I understand them, both can involve a cost for doing so. The increase in rate is tied to other promotional activity aimed at attracting new lenders over the next couple of months, and we have other changes coming through over the next month or two that will also build upon the QAA's strong foundation. Not completely accurate. The 3.5% ZOPA account does require willing purchasers for your parts but it does not involve any fee for doing so. ZOPA's 4.5% account does require a 1% fee should you wish to sell and there's a third account that also charges 1% to sell but pays 6.5% for a minimum balance of £1000 but without the protection fund of the other two. Does AC not consider ZOPA as part of the competition that they should be fully aware of or is QAA so unique that, by definition, it does not have any competition ?   Note I'm not complaining - just interested in the thought processes - and looking for accounts to recommend to aunts, daughters, sisters, etc. I'm not personally a Zopa user, although others in the business are so we do compare notes from time to time. With RS there can be a "fee" involved when selling as you need to settle the difference in rate between the rate of your loan unit(s) and the current lender rate. I don't know if there's an equivalent with Zopa. However the premise of the accounts are different, again as I understand them. The QAA maintains a significant cash balance which allows for instant liquidity in normal market conditions. In addition the sweep idle funds option is still unique in the market and a very powerful tool. That takes the account beyond just being a normal investment option like the competition.
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am
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Post by am on Apr 1, 2016 17:12:23 GMT
I'm not personally a Zopa user, although others in the business are so we do compare notes from time to time. With RS there can be a "fee" involved when selling as you need to settle the difference in rate between the rate of your loan unit(s) and the current lender rate. I don't know if there's an equivalent with Zopa. RS have stated that there are no fees to withdraw money from the monthly market. We haven't worked out what happens when there's no-one willing to takeover the loan at the same or lower rate, i.e. why is an Assignment Fee is never needed. (It is observed that withdrawal can be delayed until the diurnal variation brings the current matching rate to the right range; it's not known if there's any limit on the length of the delay. The delay explains why you can't game the system and sell out your loans when the clearing rate is high and immediately reinvest at the better rate - the money won't be withdrawn while the clearing rate is higher.)
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am
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Post by am on Apr 1, 2016 17:40:04 GMT
I'd imagine that AC feel the need to respond somehow to ZOPA's 3.5% "Zopa Access" account. I think perhaps AC's QAA needs more than 0.25% extra to get people to move to or stay with AC - given ZOPA's fame/size/popularity/etc. QAA's still brilliant for MLIA investors. RS's monthly market is a closer competitor - you can reliably get 3.6% (my current average rate is 4.1%, but that was achieved by putting extra money when the rate was spiking).
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registerme
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Post by registerme on Apr 1, 2016 18:05:16 GMT
I'm willing to work for 1%, I'm not willing to work for .25% when a) it is hard and b) it's not guaranteed I'll get it anyway  . |
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Post by chris on Apr 1, 2016 18:18:13 GMT
I'm not personally a Zopa user, although others in the business are so we do compare notes from time to time. With RS there can be a "fee" involved when selling as you need to settle the difference in rate between the rate of your loan unit(s) and the current lender rate. I don't know if there's an equivalent with Zopa. RS have stated that there are no fees to withdraw money from the monthly market. We haven't worked out what happens when there's no-one willing to takeover the loan at the same or lower rate, i.e. why is an Assignment Fee is never needed. (It is observed that withdrawal can be delayed until the diurnal variation brings the current matching rate to the right range; it's not known if there's any limit on the length of the delay. The delay explains why you can't game the system and sell out your loans when the clearing rate is high and immediately reinvest at the better rate - the money won't be withdrawn while the clearing rate is higher.) Fair enough, I'm sure I read on their section of the forum that an assignment fee of some kind was charged, but there was a lot of confusion over how it worked. Perhaps they're selling the loan unit to the provision fund which then sells it back when (if) the rate falls back to the correct level? That would clash with our advice on how the provision fund can be used, but that wouldn't be the first time different platforms have had different advice. I'd love to know how that works, but then again I'm sure they'd love to know how the QAA works behind the scenes.
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am
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Post by am on Apr 1, 2016 19:02:07 GMT
RS have stated that there are no fees to withdraw money from the monthly market. We haven't worked out what happens when there's no-one willing to takeover the loan at the same or lower rate, i.e. why is an Assignment Fee is never needed. (It is observed that withdrawal can be delayed until the diurnal variation brings the current matching rate to the right range; it's not known if there's any limit on the length of the delay. The delay explains why you can't game the system and sell out your loans when the clearing rate is high and immediately reinvest at the better rate - the money won't be withdrawn while the clearing rate is higher.) Fair enough, I'm sure I read on their section of the forum that an assignment fee of some kind was charged, but there was a lot of confusion over how it worked. Perhaps they're selling the loan unit to the provision fund which then sells it back when (if) the rate falls back to the correct level? That would clash with our advice on how the provision fund can be used, but that wouldn't be the first time different platforms have had different advice. I'd love to know how that works, but then again I'm sure they'd love to know how the QAA works behind the scenes. What we know is that on the longer term markets an Assignment Fee might be charged, and is potentially quite hefty. To the best of my knowledge we don't know how it is calculated in practice. (The diurnal variation in rates means that what value is used for the new rate is opaque.) If we take RS's statements at face value it is no longer charged on the monthly market, but we don't know how the need for it is avoided.
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jonah
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Post by jonah on Apr 2, 2016 19:47:58 GMT
QAA cap is now 10m. The value on the account is over nine million. I guess it will Hoover up a few parts of loans from the SM to help pay the (recently enhanced) monthly interest.
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Post by lb on Apr 3, 2016 11:33:34 GMT
QAA cap is now 10m. The value on the account is over nine million. I guess it will Hoover up a few parts of loans from the SM to help pay the (recently enhanced) monthly interest. how can the QAA buy parts on the SM when the parts on the SM belong to the QAA. My head hurts
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SteveT
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Post by SteveT on Apr 3, 2016 12:43:17 GMT
It won't be. The QAA is doing much of the selling.
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tonyr
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Post by tonyr on Apr 3, 2016 14:53:06 GMT
It won't be. The QAA is doing much of the selling. Any evidence for this? Other platforms reportedly have the same glut. I'd have thought it was people postponing ISA to the last minute, so pulling out of P2P at the end of the year (like I've just pulled £15k).
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SteveT
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Post by SteveT on Apr 3, 2016 15:28:05 GMT
It won't be. The QAA is doing much of the selling. Any evidence for this? Other platforms reportedly have the same glut. I'd have thought it was people postponing ISA to the last minute, so pulling out of P2P at the end of the year (like I've just pulled £15k). Circumstantial rather than definitive: a) Most of the volume for sale is in newer loans that either always had availability or were initially allocated mainly to the QAA / GBBA. So it looks like predominantly underwriter sales, and the QAA is presumably the largest "underwriter" these days. As new loans launch, the QAA will naturally look to sell down holdings of recent loans to fund purchase of the new ones, especially at a time when the QAA total went backwards for a while (until the rate was boosted) b) I have had modest Sell targets in 6 - 8 recent loans for a week or more and haven't sold a penny. The QAA has sale priority over all others (at par) so I assume the QAA is heading up the queue. c) In 2 previous posts I asked whether and then suggested that the QAA was a big part of the current selling activity. Chris studiously ignored both, which I took as tacit acknowledgment. Happy to stand corrected if I'm wrong!
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Post by chielamangus on Apr 4, 2016 14:50:50 GMT
.... QAA's still brilliant for MLIA investors. Just don't understand this view. The QAA is a competitor for loan parts, and an important seller at times. In other sectors this would be called monopolistic and monopsonistic behaviour, and undesirable as it leads to market manipulation. You might think you're getting 3.75 or 4.25 per cent; I think you're losing 3 -8 per cent in return for some liquidity. Fine, if you all you want is liquidity, but a distorting factor for those whose focus is the MLIA.
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SteveT
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Post by SteveT on Apr 4, 2016 15:36:04 GMT
Whilst I appreciate the minor benefit the QAA provides me via interest on swept funds, and the bigger advantage it affords AC in boosting deal flow by underwriting smaller / lower margin loans, it has fundamentally changed my assumptions for AC loan liquidity.
Other than for older loans that the QAA never held, I now assume the QAA will be ahead of MLIA lenders in the queue to sell pretty much all loans for the foreseeable future. Therefore that the only way to reduce a loan holding will be to offer a discount (by definition, of at least 1%). This means there is no longer any point in acquiring any more of any new loan than I am happy to hold to term.
The net effect of this is that my stake in AC has plateaued and I fear may start to decline. I'm still a big fan of AC and their approach to lending but there haven't been enough new loans that interest me recently to do anything more than reinvest my repayments. My interest threshold (in both senses of the word) is around 9%, below which I feel I'd be better off investing via the GBBA. However, until I know for certain that the GBBA diversification mechanism is working as it should be, I won't be repeating my experiment with it.
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bg
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Post by bg on Apr 4, 2016 15:52:17 GMT
Yes, the QAA is now having a significant impact on the way I think about loans on AC (and AC itself). I just can't judge liquidity anymore. I look at a loan and see £X in units available and use that to make a judgement about the loans liquidity which impacts on the amount of units I hold. But now i think this is a mirage...there may be £30k units available which usually would make me think I could quite easily sell down a loan but now I will quite possibly sell zero as the QAA takes absolute priority and can drip feed loans ahead of the queue. Some loans I have had amounts up for sale for weeks now, i can see total units for sale decreasing on a regular basis but I have sold ZERO. Not even one penny.
What worries me is some of the bigger loans..maybe the QAA is drip feeding £10-£20k chunks into the queue but actually holds millions of the loan. If that's the case I have no prospect of selling anything and feel I have been mislead into buying in the first place.
It's not a level playing field or a true market anymore.
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