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Post by Deleted on Apr 17, 2016 13:15:17 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. SS has massive spaces in front with potential deals on larger developments. Let's not confuse the consumer lending market (RS) with housing developments. They are two different things
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Post by Deleted on Apr 17, 2016 13:33:27 GMT
poppyland : Did you mean 'borrowers' rather than 'lenders'? Yes, I did mean borrowers! Some areas of the country are quite 'hot' in terms of price. Like London. I would say 20-30% reduction in prices in the next 3-5 years is possible in those areas if the general economic cycles drifts down. Of course other areas will not see this drop. So on average the slow-down of the housing market might be more limited overall.
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Post by mrclondon on Apr 17, 2016 14:00:48 GMT
Setting aside the observation that I hold loans with both AC and TC secured against property ostensibly with LTV's c. 70% at rates of 11%/12% that WILL result in capital losses to lenders, I want to take a different tack in answering the thread title "SS in the long term".
It has been pointed out that the property bridging / development market is huge and SS currently have only a very small fraction of it. Correct. It has also been pointed out that subject to the availability of lenders' cash SS can increase its share of that market without necessarily altering its core proposition to us, the lenders. Also correct.
I read a thought provoking article today on the BBC's website Can you tell if you have got too much money ? which I think has some relevance when asking the question what is the wider vision of the founders of a p2p platform ? SS started out as a marine finance specialist but realised they needed to diversify into property finance to be able to scale and achieve breakeven / enough profitability to recoup start-up costs. Ignoring the recent recruitment drive and the move to larger premises for the minute, providing the business is profitable and all employees are content their value is reflected in their remuneration, the platform founders could view that as being sufficient providing market share is maintained. There again, the founders might conclude that their local area is in need of additional employment opportunities, and further organic growth of the business will benefit the local population. Small, incremental growth, primarily self funded, with careful recruitment of a few like minded employees rarely harms a small business. My guess this is where SS is today.
At the other extreme, are the p2p founders who, although possibly not admitted in public at least at first, have always had their eye on size, global expansion, and stockmarket listings. Such p2p businesses accept vast sums of venture capital / private equity to scale up, with minimal focus on profitability. Even if the original business model can scale with investment, the ethos of the startup company is lost amongst the (now) vast staff base. The first thing that suffers is the customer facing communication and the common-sense approach seen from the newer small p2p platforms.
SS in the long term, in my view depends entirely on the overall drive and ambition of the founders. Their communication skills and approach to customer service are not the greatest in the industry, but perfectly acceptable for a micro business. My fear is that if SS decided to go all out for growth, the founders would struggle to control the growing business at a human level, with customer service and perception of the business both nose diving rapidly.
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peteuk
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Post by peteuk on Apr 17, 2016 15:32:11 GMT
But where else would you go!
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nush
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Post by nush on Apr 17, 2016 16:06:15 GMT
isn't 12% a fair rate for the risk i am taking, i think it is, maybe the rates could be lowered but then i would start looking at other options, the other options might not give me 12% return but then the perceived risk would probably be lower too. the reason the risk doesnt feel so great is purely down to the fantastic job that SS have been doing. so thanks SS and keep it up
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Post by brianac on Apr 17, 2016 16:40:58 GMT
How would you define a "correction " in percentage terms, and timescales? I wouldn't  Like I said I'm not qualified Timescales, uncertain, certainly the last one (2008) took about 6 years to come (I was seeing warning signs back in 2002-ish) London property is, to my mind, overblown, pumped up by foreign investment, Russians, Chinese, Arabs etc. those countries appear to be having their own problems recently, which may slow the foreign investment, possibly even reverse it in due course. As for percentage correction, how "overvalued" do you feel London proerty is? it's certainly at a hefty premium to the national average, some premium is justified, but how much? Certainly if/when it does, the ripples will likely affect the whole of the housing market to a greater or lesser extent, the closer to London the greater the effect. But that is just my opinion. What is your take on it? Brian
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Jeepers
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Post by Jeepers on Apr 17, 2016 16:58:11 GMT
But where else would you go! MoneyThing
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ben
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Post by ben on Apr 17, 2016 17:36:09 GMT
isn't 12% a fair rate for the risk i am taking, i think it is, maybe the rates could be lowered but then i would start looking at other options, the other options might not give me 12% return but then the perceived risk would probably be lower too. the reason the risk doesnt feel so great is purely down to the fantastic job that SS have been doing. so thanks SS and keep it up Have they been good? At the moment there has not be an economic downturn so they have not been tested. Most property prices are still going up so it has always been in the interest of the borrorow to pay back but what happens when the value crashes or stays the same the borrower could end up owing more then the asset is worth even if they can afford to pay it they might not think it is worth it. Another potential risk for the future is that with wages going up on the lower end with the living wage the cost of construction will go up, granted a lot of construction workers are probably on more then that but what about the suppliers where they buy the materials, most of there staff probably are not so there costs will go up and that will passed on in the price of materials
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nush
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Post by nush on Apr 17, 2016 18:08:25 GMT
isn't 12% a fair rate for the risk i am taking, i think it is, maybe the rates could be lowered but then i would start looking at other options, the other options might not give me 12% return but then the perceived risk would probably be lower too. the reason the risk doesnt feel so great is purely down to the fantastic job that SS have been doing. so thanks SS and keep it up Have they been good? At the moment there has not be an economic downturn so they have not been tested. Most property prices are still going up so it has always been in the interest of the borrorow to pay back but what happens when the value crashes or stays the same the borrower could end up owing more then the asset is worth even if they can afford to pay it they might not think it is worth it. Another potential risk for the future is that with wages going up on the lower end with the living wage the cost of construction will go up, granted a lot of construction workers are probably on more then that but what about the suppliers where they buy the materials, most of there staff probably are not so there costs will go up and that will passed on in the price of materials yes they have been good so far, other sites offering lower rates are having defaults, ss have had 2 so far (i think), so not too bad really, those 2 caused no harm to investor pockets. i understand we should expect some defaults but so far so good.
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Post by Deleted on Apr 17, 2016 18:21:34 GMT
Interesting to see so many newbie posters on this thread.....
I find SS useful but the risk is not in the rate, so you have to deselect a fair proportion of what is offered on property.
Will it survive, as long as it keeps its software simple and does not keep wasting IT budget on it it will do fine.
FC have gone institutional
RS rates have gone up in the last months, but who knows what has happened to the risk
P2P will stay useful as long as the institutions are kept out of it.
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Post by cassiopeia on Apr 17, 2016 19:04:54 GMT
yes they have been good so far, other sites offering lower rates are having defaults, ss have had 2 so far (i think), so not too bad really, those 2 caused no harm to investor pockets. i understand we should expect some defaults but so far so good. What's that as a percentage?
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Post by Deleted on Apr 17, 2016 19:17:03 GMT
yes they have been good so far, other sites offering lower rates are having defaults, ss have had 2 so far (i think), so not too bad really, those 2 caused no harm to investor pockets. i understand we should expect some defaults but so far so good. What's that as a percentage? Well, I think there have been 3 'defaults' (missed repayments) but in all cases the security was sufficient to repay everything back. Probably those 3 were out of around 90 loans (so a bit more than 3% default rate), but their absolute money value was very limited. What is very critical to guarantee sufficient protection to lenders is the valuation. Read the reports, make yourself questions, see if things are realistic and always think to the worst case scenario. If the valuation is correct, the risks of not recovering sufficiently from the sale of the security are low.
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ilmoro
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Post by ilmoro on Apr 17, 2016 21:57:58 GMT
yes they have been good so far, other sites offering lower rates are having defaults, ss have had 2 so far (i think), so not too bad really, those 2 caused no harm to investor pockets. i understand we should expect some defaults but so far so good. What's that as a percentage? Lets see 92PBL (incl SY but excl DFl as continuations), 5 never drewdown, 2 rolled into another, but one had second tranche so that gives us 86 with 1 default = 1.16% Boats est 25 (at least 20 but few before my time), 2 defaults = 8% Overall est. 111 loans, 3 defaults = 2.7%
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Post by earthbound on Apr 17, 2016 22:07:42 GMT
very low in my p2p book  |
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sqh
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Post by sqh on Apr 18, 2016 0:07:27 GMT
IMO SS have grown quickly because they have kept the platform simple, and they have achieved this by increasing the size of their loans rather than the number of loans. Currently, there are only 61 loans listed and quite a few are to the same borrower.
That makes monitoring loans less time consuming, and spotting a potential default early. I don't know any other platform that can keep watch of their loans as efficiently as SS. If they maintain this strategy, I see no reason to drop rates to lenders.
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