poppyland
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Post by poppyland on Apr 17, 2016 5:06:42 GMT
I'm interested to hear what people think about SS in the long term, and specifically: do you think they be able to carry on paying such a great rate of interest? My husband was wondering yesterday whether as time goes by other players will get into the market offering borrowers lower rates, so that lenders get lower rates too.
Any thoughts folks?
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Post by jackpease on Apr 17, 2016 6:47:45 GMT
I've pondered similarly on other threads. FC unilaterally lowered its rates several months ago and still attracts investors, Ratesetter's rates have drifted down in recent months, it's all very nice getting 12% with SS's fabulously simple system but in the end it's hard to see how it can last. If rates to borrowers are not competitive either deal flow will drop or quality will drop.
If SS dropped its rates for some of its massively oversubscribed nuggets I'd suspect they'd still be massively oversubscribed despite getting a flaming on this forum. eg I know i'd rather get what i want at 10% rather than restricted to £200 at 12%.
Jack P
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jcb208
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Post by jcb208 on Apr 17, 2016 6:48:43 GMT
Long term to expand there business I think savingstream will offer different rates depending on LTV and risk which will allow them to compete in a wider market
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jonah
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Post by jonah on Apr 17, 2016 7:00:24 GMT
Long term it won't last I agree. But if in the medium term one or two large pbls goes into default or loses money after the PF then it might last a little longer. I suspect that people don't quite realise the scale of the risk with SS. I would like them to maintain their record obviously but don't expect that it will happen.
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poppyland
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Post by poppyland on Apr 17, 2016 7:17:14 GMT
I wonder if maybe SS can remain attractive to lenders even at current rates by for example being quicker to approve loans than other platforms (without compromising on quality) or by being able to fund the loan more quickly (due to the pipeline being in place). It will be interesting to see how things evolve - but salutory to realise that other platforms have already lowered their rates to lenders.
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adrianc
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Post by adrianc on Apr 17, 2016 8:00:22 GMT
Ratesetter's rates have drifted down in recent months Not by much. Looking at the RateTrends graph on RS - members.ratesetter.com/ratesetter_info/rate_trends.aspx - if anything, they've drifted up slightly since 2013. I thought the consensus was that the rates SS charge to their market are actually fairly typical in the commercial bridging loan sector? FC's problems aren't (just) the rate.
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agent69
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Post by agent69 on Apr 17, 2016 8:48:35 GMT
For me the biggest draw back to SS is the lack of diversity (and I'm not talking about Ashley Bango). I wonder whether people will eventually reach their property comfort threshold.
I'm happy taking a small punt, but can't see my investment level in SS getting anywhere near other platforms that I use.
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Post by cassiopeia on Apr 17, 2016 9:06:15 GMT
Regarding SS, what little info has been provided implies that borrowers pay something like 18%/annum plus an initial fee, so perhaps 20% effective on a 1-year bridge loan. This might now be lower if SS has been willing to cut it's margins to scale volumes. This might seem high but the typical BLs on SS are 60-70% LTV, which is very much senior stretch territory, rather than the average BL which is comfortably in senior territory at 45-50%. So SS could be lending at 20% whilst paying investors only 12%, this seems like a bad deal for lenders and possibly borrowers as well. Why should a reputable borrower wish to take out a loan at 20%? Does anyone know the borrowing rates or differential between lending and borrowing for the other P2P lenders; or are these shrouded in secrecy as well?
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Maestro
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Post by Maestro on Apr 17, 2016 9:07:20 GMT
The actual market is probably much larger given a proportion of bridge loan data is not collected. If we look at collected bridging data (say the WOBI index), however, we see that the average interest rate paid by borrowers has dropped substantially from 18% to something closer to 13-15%, while LTVs have risen modestly from 45% to 50%. So competition is clearly driving rates lower, though from very high levels post the 2008 crisis. The danger is that rates continue to compress while LTVs rise (and those LTVs are now based on 20%+ higher commercial property levels since 2013). The danger is acute for P2P lenders since they are only receiving 60-75% of the actual return. Thanks for the pointer to WOBI index, it was an interesting read.
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Post by brianac on Apr 17, 2016 9:21:29 GMT
I'm interested to hear what people think about SS in the long term, and specifically: do you think they be able to carry on paying such a great rate of interest? My husband was wondering yesterday whether as time goes by other players will get into the market offering borrowers lower rates, so that lenders get lower rates too. Any thoughts folks? I suspect property is in for a correction, particulalrly in London (just an opinion, I'm not qualified or anything) so I'm wary of anything in or against property, however another part of me says "make hay whilst the sun shines" Previous property correction was "coming" for about 5 or 6 years before it hit, I missed out on a potential property investment because I figured a correction was coming, with hindsight I could have been in and out with plenty of time to spare (but isn't hindsight a fairly useless attribute!) FWIW I'm in SS in a small way, gradually increasing month by month, but will, if/when I feel the time is right, make an exit - hopefully without too much angst (but maybe I'm being an optimist there) Brian
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mikes1531
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Post by mikes1531 on Apr 17, 2016 10:19:05 GMT
I wonder if maybe SS can remain attractive to lenders even at current rates by for example being quicker to approve loans than other platforms (without compromising on quality) or by being able to fund the loan more quickly (due to the pipeline being in place). : Did you mean 'borrowers' rather than 'lenders'?
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Liz
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Post by Liz on Apr 17, 2016 11:52:59 GMT
I'm interested to hear what people think about SS in the long term, and specifically: do you think they be able to carry on paying such a great rate of interest? My husband was wondering yesterday whether as time goes by other players will get into the market offering borrowers lower rates, so that lenders get lower rates too. Any thoughts folks? I suspect property is in for a correction, particulalrly in London (just an opinion, I'm not qualified or anything) so I'm wary of anything in or against property, however another part of me says "make hay whilst the sun shines" Previous property correction was "coming" for about 5 or 6 years before it hit, I missed out on a potential property investment because I figured a correction was coming, with hindsight I could have been in and out with plenty of time to spare (but isn't hindsight a fairly useless attribute!) FWIW I'm in SS in a small way, gradually increasing month by month, but will, if/when I feel the time is right, make an exit - hopefully without too much angst (but maybe I'm being an optimist there) Brian How would you define a "correction " in percentage terms, and timescales?
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poppyland
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Post by poppyland on Apr 17, 2016 12:20:16 GMT
poppyland : Did you mean 'borrowers' rather than 'lenders'? Yes, I did mean borrowers!
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Jeepers
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Post by Jeepers on Apr 17, 2016 12:43:18 GMT
I doubt SS would be drop the rate paid to lenders as it would probably kill the business.
As an investor, you have to weigh up the this to reward and even at 10%, I'd be pulling out because after the tax man has taken his slice, it just wouldn't be worth it.
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Post by Deleted on Apr 17, 2016 13:11:19 GMT
I've pondered similarly on other threads. FC unilaterally lowered its rates several months ago and still attracts investors, Ratesetter's rates have drifted down in recent months, it's all very nice getting 12% with SS's fabulously simple system but in the end it's hard to see how it can last. If rates to borrowers are not competitive either deal flow will drop or quality will drop. If SS dropped its rates for some of its massively oversubscribed nuggets I'd suspect they'd still be massively oversubscribed despite getting a flaming on this forum. eg I know i'd rather get what i want at 10% rather than restricted to £200 at 12%. Jack P FC has massively diminuished its dealings with the general public. Most of its lending today is via a fund and via institutionals. It is an entity much closer to an investment bank now than to a p2p company. I would not count it at all in the general picture and its rate decisions are not at all market driven but management-driven to try and achieve profitability soon (also in view of a potential quotation on the stock market, which has been tipped many times for 2017/2018). Also RS has a different target class which is consumer (personal) loans. In that field, the space for growth is lower and of course there is competition from traditional banks. This is why RS rates have generally stayes lower than any SME or development loan. I see RS almost as a savings account now. Not using it for 'investments'. SS targets a totally different market, which is building/bridging/development. This market is ENORMOUS. SS has not even touched the tip of this market. It can EASILY expand 10x if it finds enough lenders/investment money, without touching the rates. At present only a small selection of (relatively) tiny projects come to SS. Larger developments have just started to appear but are rare here, while in real life there are many thousands around which are financed by deeper pockets.
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