New property loans flood the market. Should we be worried?

To be quite honest the whole business model is a shambles. Apart from the other points mentioned, the fact that interest is accrued from a set date no matter when the investment is placed is the main reason loans are slow to fill.

For example the Poole loan with interest accusing from 5th May... Why put the cash in on the 5th May when you can have it earning 12% elsewhere for 2 weeks and then put this cash in the FS loan. Everybody wants to get in at the last minute.

Another valid point!

Why they can't pay interest from date of investing is silly - they end up having to do it with most loans now

I'm not on FS, and based on this thread I won't be rushing in. 

But, I avoid all sites that pay interest from the date of investing.  Where does the money come from?  If it's not a Ponzi (which is a concern), it has to come out of the platform's margin.  This is either unsustainable or indicative of an extremely high margin between what the borrower pays and what we get.  And that implies high risk. 

[Mod hat off]

The balance between supply and demand swings regularly for most P2P platforms and several have responded to a glut of new loan origination with lender incentives. Last year I was the happy beneficiary of cashback on FC (pretty much daily), SS and ABL. So far this year the main opportunities have been at FS and MT. Can platforms sustain paying cashback indefinitely?; almost certainly not. Can they afford it on some large loans for a while as part of a wider expansion?; probably yes. From a lender's perspective, I think the key thing is still to evaluate the loan on its merits (ignoring the added incentive) and decide whether or not to invest accordingly.

Most of the loans currently available on FS appear pretty similar to those we've been filling (without cashback) for many months, so I'm happy to take advantage of the current opportunities to boost my returns a little.

Typical supply and demand.

Loads of loans available on FS = low demand.

Whereas SS is low supply = high demand. People are watching their PC for hours on end for loans to come on the SM.

A small team and a tight ship often mean small margins.  If that's the case, offering incentives could make a big dent in profitability.  I don't believe that's sustainable, but the platform has to do it in order to maintain credibility with borrowers until they can correct the supply/demand imbalance.

Based on past experience, ISTM that most of the times FS have rolled over a loan that included bonus interest the bonuses were repeated for the follow-on loan.  (The second priority loan on the Italian books is an example.)  Where they did not repeat the bonus rates, they treated the process as a closure of the old loan and the opening of a new loan, with no automatic rollovers for investors.  Automatic rollovers typically mean 70-80% of the investors transfer to the new loan, making the job of funding the loan relatively easy.  (If the Scottish Boatyard loan renews, I'd expect a much lower rollover rate.)  If a bonus interest offer isn't repeated, I'd expect a much lower rollover rate, as BHs earning 16% in the maturing loan probably aren't willing to rollover at 12%, making it harder to fund the replacement loan.  In a time of low supply, that might not be a problem for FS.  In the current situation, it is.

So it could be interesting six months from now, though FS could have many more eager investors by then.  And they have some control over the renewal timing, so they ought to be able to spread any glut of renewals over a few weeks and that ought to make funding easier.

Jaydee... It was a really long post.. 99% thumbs up. But the last line.. 100% ... I've been banging on for ages about it.