JamesFrance
Member of DD Central
Port Grimaud 1974
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Post by JamesFrance on May 27, 2016 7:33:22 GMT
For two weeks I have had cash available for loans at 10% or more and even had added some to invest in a loan due to draw down. When the loan finally arrived I received an investment of £18 so I have now given up and am withdrawing the balance to invest elsewhere.
Does this mean that large amounts being deposited into the low rate auto accounts will result in manual lenders getting an ever decreasing share of the rate charged to borrowers, or are the sub 10% loans perceived as lower risk?
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Post by Butch Cassidy on May 27, 2016 8:24:14 GMT
AC have taken a corporate decision to build a low rate, consumer friendly platform to take advantage of the rate hungry savers that are being offered derisory interest rates on ISA's & other savings accounts by the banks. As a soon to be shareholder I think it is a good choice & I will hopefully benefit over the next few years. However as an early adopter investor I can see that anyone who can think for themselves & balance what level of reward matches individual loan risk no longer has a future here, the MLIA is dead in all but name (once the legacy loans expire) & even GBBA/GEIA look to be heading for lower rates than 7% in the future. AC are being driven in large part by market forces, massive over supply of money awaiting investment & capacity constrained pipelines of demand so price/rate/return is allowed to fall (similar to pricing for liquidity rather than risk but that is a touchy subject  ).
Whether these loans are truly lower risk only time will tell, my opinion is that they offer poor value but everyone must decide the level of risk to suit their own appetite. My view is that this will continue for the foreseeable future so I have withdrawn approx. third of my investment over the last few weeks & the rest will follow as loans mature, #166 will take another large chunk next month. The good news is that there are still plenty of 12%+ opportunities on competitor platforms that with a small amount of DD can provide good value risk/reward returns. I started a thread on reasons to be optimistic for the future of the MLIA & no one could seem to find any, not even the 3 AC contributors, which kind of sums it up.
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mikes1531
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Post by mikes1531 on May 28, 2016 14:42:47 GMT
I have withdrawn approx. third of my investment over the last few weeks & the rest will follow as loans mature, #166 will take another large chunk next month. : I realise that #166 has a stated maturity date of 17/Jun, but with three refurbishment projects on the go at the moment ISTM that repayment on time would seem to be unlikely. Do you have some info other than what's shown on the website that might suggest the loan will be repaid on schedule?
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Post by jevans4949 on May 28, 2016 20:27:15 GMT
Only solution is to Vote Leave. If we do, all the Russian Oligarchs will be taking their money out of London, and interest rates will soar - according to George Osborne. Dunno where the Oligarchs are going to invest it all instead, though.
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Post by brianac on May 29, 2016 7:13:42 GMT
Only solution is to Vote Leave. If we do, all the Russian Oligarchs will be taking their money out of London, and interest rates will soar - according to George Osborne. Dunno where the Oligarchs are going to invest it all instead, though. Rates may then go up, but will the <differential> rate go up or down? I would guess it will go down. e.g. rates go up to 10% and returns go up to 13 or 14% - differential rate only 4% (numbers plucked out of the air to demonstrate, not a prediction) Brian
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bg
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Post by bg on May 29, 2016 7:46:54 GMT
Only solution is to Vote Leave. If we do, all the Russian Oligarchs will be taking their money out of London, and interest rates will soar - according to George Osborne. Dunno where the Oligarchs are going to invest it all instead, though. Rates may then go up, but will the <differential> rate go up or down? I would guess it will go down. e.g. rates go up to 10% and returns go up to 13 or 14% - differential rate only 4% (numbers plucked out of the air to demonstrate, not a prediction) Brian I think more importantly in this scenario, asset prices would be collapsing leading to much higher chances of capital losses on loans. I would not like to be in any commercial property bridges with 70% LTV in this scenario. People investing in SS and FS in particular beware.
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Post by mrclondon on May 30, 2016 17:05:35 GMT
I've removed the subsequent posts relating to Brexit from this thread as they had no bearing on potential changes to AC's interest rates, and copied them into a new locked thread on the chat board.
Discussing the impact of the vote on UK fiscal and monetary policy and hence consequences for specific p2p platforms is fine, but the wider political discussion can all too easily become overheated and takes an inordinate amount of time to moderate.
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Post by jevans4949 on May 31, 2016 0:23:09 GMT
Sorry that my comment, which was intended to be ironic, has caused the mods so much grief.
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JamesFrance
Member of DD Central
Port Grimaud 1974
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Post by JamesFrance on May 31, 2016 8:42:59 GMT
I am still unclear about whether AC are now retaining a higher share of the interest charged to borrowers or whether the 8% loans are seen as lower risk, although they don't appear to be much different from loans which paid 11 or 12% previously. Otherwise is this increasing demand from investors meaning that lower rates are offered to borrowers to attract them to AC as it launches more mass market lender accounts?
I am finding the European platforms much easier to invest through as they still have plenty of loans available at attractive rates, so one can add funds which can be earning immediately. With the British platforms it is becoming difficult to even reinvest repayments.
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Post by chris on May 31, 2016 8:49:33 GMT
I am still unclear about whether AC are now retaining a higher share of the interest charged to borrowers or whether the 8% loans are seen as lower risk, although they don't appear to be much different from loans which paid 11 or 12% previously. Otherwise is this increasing demand from investors meaning that lower rates are offered to borrowers to attract them to AC as it launches more mass market lender accounts? I am finding the European platforms much easier to invest through as they still have plenty of loans available at attractive rates, so one can add funds which can be earning immediately. With the British platforms it is becoming difficult to even reinvest repayments. Our margins are broadly the same, reducing the liquidity premium just makes us more competitive in the market place.
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Post by Deleted on May 31, 2016 8:56:52 GMT
To be fair to AC, both Chris and Andrew have telegraphed this move for about a year now and been very open about the idea of moving into this new niche. I hope they get the improvement in risk control they are after and pick up the volume they need. Like James I see the future being elsewhere and I too struggle to re-invest though I see the shrapnaltor as my friend for another 12 months or so.
I think the sudden dryness across the portals is down to Brexit who would invest with this thing hanging over their heads. Once we are past the vote it will either get much easier or much worse depending on the direction.
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Post by chris on May 31, 2016 14:13:34 GMT
I think the sudden dryness across the portals is down to Brexit who would invest with this thing hanging over their heads. Once we are past the vote it will either get much easier or much worse depending on the direction. For us it's just clumping in the pipeline. We had a couple bottlenecks in the pipeline that were causing pulses of loans to come through. We've increased resource there now and have improved our internal workflow tracking (with another upgrade this week that will let me do some cool predictive stuff once we've collecting a couple of month's data) as we're keen to move up into the £10-15m+ per month realm and have the enquiries to do it. Will take a few weeks for those improvements to feed through but once they do our overall volumes should continue to increase. There's around £12m of loans the sales team thinks can draw between now and the end of June. My existing predictive model, which is very simplistic, reckons around £7-7.5m of that will do so, with more than that already predicted for July based just on currently signed deals. Day by day and even week by week predictions are much harder at the moment as it normally falls to the different sets of lawyers agreeing a time and then hitting it, so I'm not sure how much of that will bunch towards the end of June vs arriving nice and early. I guess what I'm trying to get across is that the current drought is a temporary phenomenon lasting a few weeks rather than a prolonged effect like we went through last year that required major change to fix. In a few weeks time I expect to be back to complaints that there are too many loans.
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Post by Butch Cassidy on May 31, 2016 14:53:44 GMT
I think the sudden dryness across the portals is down to Brexit who would invest with this thing hanging over their heads. Once we are past the vote it will either get much easier or much worse depending on the direction. I guess what I'm trying to get across is that the current drought is a temporary phenomenon lasting a few weeks rather than a prolonged effect like we went through last year that required major change to fix. In a few weeks time I expect to be back to complaints that there are too many loans.Only if the headline rate of return is too low for the risks involved, anything that is good value would be snapped up by MLIA investors, even if the other accounts didn't want it - just try listing some at 10-12%+.
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Post by chris on May 31, 2016 15:01:42 GMT
I guess what I'm trying to get across is that the current drought is a temporary phenomenon lasting a few weeks rather than a prolonged effect like we went through last year that required major change to fix. In a few weeks time I expect to be back to complaints that there are too many loans.Only if the headline rate of return is too low for the risks involved, anything that is good value would be snapped up by MLIA investors, even if the other accounts didn't want it - just try listing some at 10-12%+. Where we find loans paying that rate that pass our credit policy then we'll list them. Looking through the pipeline where I have data there are a few loans that will meet your criteria, including one or two quite sizable ones, even if the majority do not.
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oldgrumpy
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Post by oldgrumpy on May 31, 2016 19:03:28 GMT
"There's around £12m of loans the sales team thinks can draw between now and the end of June. My existing predictive model, which is very simplistic, reckons around £7-7.5m of that will do so ...."
Oh, that's good news. Mmmm. Where's my salt cellar?
Does AC genuinely consider all these loans at 7-8.5% significantly lower risk than the 10-12% we were offered during 2014-2015?
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