cooling_dude
Bye Bye's for the PPI
Posts: 2,853 
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Post by cooling_dude on Jun 7, 2016 15:26:21 GMT
How strange; maybe it is a requirement provided by the FCA? I would be surprised if SS was going to offer varied rates.
However... it's not something I would be upset at seeing. There aren't many loans currently on SS I would invest in if they where less than 12% but plenty I avoid beacuse I don't think 12% is enough.
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SteveT
Member of DD Central
Posts: 6,875
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Post by SteveT on Jun 7, 2016 15:50:06 GMT
Perhaps it's just to acknowledge and encompass the potential for defaults, and therefore potential unpaid interest reducing returns to less than 12%pa
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NSFW
Posts: 118
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Post by NSFW on Jun 7, 2016 16:18:32 GMT
Perhaps it's just to acknowledge and encompass the potential for defaults, and therefore potential unpaid interest reducing returns to less than 12%pa Exactly what I was thinking when posters above mentioned the FCA. Although, why mention the percentage for every loan part in "My Loans"?
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Liz
Member of DD Central
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Post by Liz on Jun 7, 2016 17:52:54 GMT
Anything less than 12% won't work. Higher risk loans will take more from the PF than lower risk loans, which isn't fair,! Lower rates won't attract funds.
Higher rates maybe, is needed for these high risk loans.
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Post by yorkshireman on Jun 7, 2016 18:18:32 GMT
LendInvest quote annualised rates on "Current loans" and net interest (monthly rate) to 4 decimal places when displaying "My Portfolio" which I find rather annoying. Don't give Assetz more ideas... You beat me to it! I still fail to see why AC have to work to so many decimal places.
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Post by yorkshireman on Jun 7, 2016 18:24:09 GMT
Saving Stream are doing very well with the current formula that they have introduced, so why would they consider changing it? For the same reason that most financial outfits do, usually using the pretext “the market is working properly” Think about it! 
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Post by harvey on Jun 7, 2016 19:26:39 GMT
The change in the wording on the website today so now it is up to 12% has come as a bit of a surprise.
I can't help thinking there is some connection here between the default within the last couple of weeks and this sudden change. Of course the two matters could be unconnected but that would surprise me.
I wonder if they are covering their backs because this first big default has brought it home to them that some investors will not get 12% overall. Perhaps they have changed the wording slightly on legal advice.
Perhaps they are going to go down the road of offering different rates on different loans but that will be complicated to administer and could confuse the investors a bit.
Perhaps they are working out the sums and realise they can't afford to keep paying 12% on everything when there are defaults along the way and the provision fund being depleted so they are planning on increasing their profit margin in the future to make them more sustainable.
I assume they can't retrospectively change the 12% rate on existing loans and so any differential rates could only apply in the future.
The confusing Factor here is the addition of the monthly rate field to all the individual loan details. If they weren't going to be having different rates on different loans then why would you need that box in the first place. It all suggest there will be different rates according to the risk levels and it isn't just about making it clearer that the Return will be up to 12% and not a guaranteed 12%.
I have to say that given the details of some of the loans we have seen recently if the rates were less than 12% I don't think I would be interested in them.
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Post by earthbound on Jun 7, 2016 20:44:43 GMT
Or maybe slightly lower rates to us on good quality loans and more into the PF. Personally i would welcome this.
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bloodycat
Member of DD Central
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Post by bloodycat on Jun 7, 2016 21:03:33 GMT
I have to say that given the details of some of the loans we have seen recently if the rates were less than 12% I don't think I would be interested in them. Even at 12% there's some I'm not interested in at 70% LTV, and that's before we get into whether or not some of these valuations are overly optimistic.
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Post by supernumerary on Jun 7, 2016 21:21:02 GMT
Saving Stream are doing very well with the current formula that they have introduced, so why would they consider changing it? For the same reason that most financial outfits do, usually using the pretext “the market is working properly” Think about it! To be honest, I don't know what you are going on about, or the point that you are attempting to make! 
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Post by earthbound on Jun 7, 2016 23:20:49 GMT
For the same reason that most financial outfits do, usually using the pretext “the market is working properly” Think about it! To be honest, I don't know what you are going on about, or the point that you are attempting to make! "The market is working properly"..... for who?
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Post by supernumerary on Jun 8, 2016 9:08:39 GMT
To be honest, I don't know what you are going on about, or the point that you are attempting to make! "The market is working properly"..... for who? Perhaps yorkshireman can answer your question, because it was he who introduced the phrase "The market is working properly", without fully explaining why.....
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Post by dualinvestor on Jun 8, 2016 11:20:11 GMT
Or maybe slightly lower rates to us on good quality loans and more into the PF. Personally i would welcome this. TBH if SS are going to try and keep their "not a penny lost" reputation the size of the PF is irrelevant. They will always top it up if able, if unable because of size of a default it won't pay out in full. Depending on your point of view either the borrower pays for it anyway because the fee is charged to them and should they repay it ends up in Lendy Ltd's P&L Account or you the lenders pay it. So assuming SS might be thinking of abandoning the PF may be thinking of increasing interest rates;)
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Post by earthbound on Jun 8, 2016 11:30:52 GMT
Or maybe slightly lower rates to us on good quality loans and more into the PF. Personally i would welcome this. TBH if SS are going to try and keep their "not a penny lost" reputation the size of the PF is irrelevant. They will always top it up if able, if unable because of size of a default it won't pay out in full. Depending on your point of view either the borrower pays for it anyway because the fee is charged to them and should they repay it ends up in Lendy Ltd's P&L Account or you the lenders pay it. So assuming SS might be thinking of abandoning the PF may be thinking of increasing interest rates;)What a good point, that has never occurred to me , personally i hope not as i like the PF idea , but FS seem to be getting along ok at the moment without one. 
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Post by mrclondon on Jun 8, 2016 11:44:51 GMT
The main selling point for PF's was to improve the tax efficiency of p2p especially for higher / additional rate tax payers. Now bad debts can be offset against p2p interest for income tax, PF's on most platforms have become less valuable as a marketing tool, and indeed I have heard it said by a platform (other than SS that does have a PF) they are actually becoming a negative from a marketing point of view unless the underlying loans are all small (i.e. when multiple defaults only scratch the surface of the PF). I believe this is particularly true when targeting sophisticated / HNWI investors who perceive they are receiving lower overall returns due to the PF.
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