blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Apr 8, 2014 18:56:09 GMT
FC have recently removed their statement in 'how it works' that on average it takes 2 days to sell loans and get you cash back at par. Now nothing is said, all airbrushed out as if it never had been said. So how long does it take? I have placed at about 6pm today 43 loan parts at C- for sale at par, values from £35 to £95, nearly all at 11.5% except four at 12.3%. Total sale value £2464.77. All with good payment histories of three repayments or more. Let us see how long it takes to get the money back. I will keep the forum posted.
|
|
fasty
Member of DD Central
Posts: 1,038 
Likes: 388
|
Post by fasty on Apr 8, 2014 19:15:34 GMT
Thanks blender, interesting experiment. Don't hold your breath though - I've had a few C- at 11.5 and 11.6 sitting unsold for weeks now. Just one went today 
|
|
|
|
Post by aloanatlast on Apr 9, 2014 3:41:08 GMT
Well they all fall off inside a fortnight, so it depends whether people keep putting them back on sale at par. This is uncharted territory. People who want to withdraw cash will have to discount, but if a lot of people start to keep stuff on the market at par just on the off-chance, sales are going to remain slow unless FC take steps to clear the backlog.
FC have said that if you have to give 2% discount on 10% of your sales, that's only 0.2% averaged out. Of course many Autobid users would need to discount a lot more than 10% of their stock.
But this is irrelevant to many sellers, because they don't need the cash, they'll only reinvest the sale proceeds. Selling-to-buy at market prices only makes sense for default-dodging, but many lenders are now sitting on a pile of loan parts that are worth less than par, so par is a good price if they can get it and it makes sense to keep their stock on sale.
This might not be fixable. A market that gives lenders a permanent guarantee against price falls by dumping their tat on unsuspecting new lenders might not be sustainable in the long run.
|
|
mikeb
Posts: 1,072
Likes: 472
|
Post by mikeb on Apr 9, 2014 17:48:15 GMT
FC have said that if you have to give 2% discount on 10% of your sales, that's only 0.2% averaged out.
To me, that's bogus maths. And typical of the sort of handwavy response we've come to know. If I have 100 loans I want to sell at par (let's forget about premiums for now!) and they won't sell, then I list 90 of them at par, and 10 at 2% discount. "It's only 0.2%" ... yes, IF THEY ALL THEN SELL! But they don't -- that's why people are having to discount! Actually, what happens is 10 of them sell at 2%, 90 are left sat at par not shifting. Then I relist 81 at par, and 9 at discount of 2%. Still only 0.2% averaged out ... Then I relist 73 at par, and 8 at discount of 2%. Still only 0.2% averaged out ... Seeing the problem? But wait, at the end of this, the par parts keep coming back, and the 2% discounters all sell, and it's actually 2% averaged out plus months of relisting. Should have just dumped the lot at 2% and saved time.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Apr 9, 2014 19:02:10 GMT
This might not be fixable. A market that gives lenders a permanent guarantee against price falls by dumping their tat on unsuspecting new lenders might not be sustainable in the long run. Tat? True the 4% loans and £1000 loan parts might not be expected to go at par - if you lend quickly you sell slowly. Apart from the 11.5% C- I have nothing below current par and it still sells very slowly. When 11.5% C- loan parts at MBR go from gold dust to tat in a few months then there is something wrong with the platform. Borrowers were getting too good a deal in mid 2013, so perhaps it was all tat.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Apr 9, 2014 19:07:43 GMT
FC have recently removed their statement in 'how it works' that on average it takes 2 days to sell loans and get you cash back at par. Now nothing is said, all airbrushed out as if it never had been said. So how long does it take? I have placed at about 6pm today 43 loan parts at C- for sale at par, values from £35 to £95, nearly all at 11.5% except four at 12.3%. Total sale value £2464.77. All with good payment histories of three repayments or more. Let us see how long it takes to get the money back. I will keep the forum posted. First report on progress on selling the 43 C- loan parts at par. After the first 24 hours, parts sold = zero, nil, nowt, etc. Still, if they all sell by this time tomorrow then FC will still meet the average of 48hours. Yes, that must be what will happen.
|
|
|
|
Post by aloanatlast on Apr 10, 2014 6:48:30 GMT
This might not be fixable. A market that gives lenders a permanent guarantee against price falls by dumping their tat on unsuspecting new lenders might not be sustainable in the long run. Tat? True the 4% loans and £1000 loan parts might not be expected to go at par - if you lend quickly you sell slowly. Apart from the 11.5% C- I have nothing below current par and it still sells very slowly. When 11.5% C- loan parts at par go from gold dust to tat in a few months then there is something wrong with the platform. Borrowers were getting too good a deal in mid 2013, so perhaps it was all tat. Yes. Cyclic markets always punish (what turns out to be) bad timing.
And the nature of fixed-interest markets is that good news for future investors is bad news for those who've already invested. Not a good idea to set them against each other though. Businesses needing more investment could generally get it easier and cheaper by compromising the interests of existing investors, but they should keep faith and resist temptation.
It would have been better to avoid rates going too low in the first place. There was a lot of talk at the time about how to ration lending, if not by price.
But all such manipulations create a rigged market, which is always a dangerous place to play.
The question for P2P is how to create a naturally stable market.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Apr 10, 2014 7:38:11 GMT
Yes. Cyclic markets always punish (what turns out to be) bad timing.
And the nature of fixed-interest markets is that good news for future investors is bad news for those who've already invested. Not a good idea to set them against each other though. Businesses needing more investment could generally get it easier and cheaper by compromising the interests of existing investors, but they should keep faith and resist temptation. It would have been better to avoid rates going too low in the first place. There was a lot of talk at the time about how to ration lending, if not by price. But all such manipulations create a rigged market, which is always a dangerous place to play. The question for P2P is how to create a naturally stable market. I agree with that, and it must be remembered that FC did try to hike up the rates through MBR - I supported that and they should have stuck with it. But think about a cyclical market and the position of FC. It is the platform that is cyclical, or at least unstable. But the general market conditions have been stable for FC's lifetime - flat calm if you consider general interest rates and no real challenge from the banks. Let us hope this is just growing pains, because if the FC platform is unstable in a flat calm as market leader, what will happen when the general weather becomes more changeable?
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Apr 10, 2014 20:31:48 GMT
48 hours is up, the average time it takes to sell your loan parts at par. How many of my 43 C- loan parts have sold? You guessed, zero, even the ones at 12.3%. Best if I report when one is sold.
|
|
|
|
Post by GSV3MIaC on Apr 10, 2014 20:52:26 GMT
You must just have the wrong ones - I sold 2 of 4651 at par (12.3% iirc) to two different people in the last 4 hours, and I only have a dozen or so par parts listed. I must admit that C-s, at whatever rate, are not flying off the shelves like As at 13% are.
|
|
|
|
Post by gingergent on Apr 10, 2014 22:18:44 GMT
48 hours is up, the average time it takes to sell your loan parts at par. How many of my 43 C- loan parts have sold? You guessed, zero, even the ones at 12.3%. Best if I report when one is sold. In fairness, with some A-rated (and plenty if you include B- and C-rated) loans available at higher rates it would be an even more worrying statement about the market if they were shifting - even by FC's "who pays tax?" net return calculations that's only equivalent to an 8.8% A-rated (assuming you buy into their other assumptions and calculations). It's an interesting experiment, though - and does quantify exactly how backed-up the SM really is. It'll be interesting to see if rates bounce up when cashback ends as quickly as they dropped when it was introduced!
|
|
|
|
Post by aloanatlast on Apr 11, 2014 7:19:27 GMT
48 hours is up, the average time it takes to sell your loan parts at par. How many of my 43 C- loan parts have sold? You guessed, zero, even the ones at 12.3%. Best if I report when one is sold. In fairness, with some A-rated (and plenty if you include B- and C-rated) loans available at higher rates it would be an even more worrying statement about the market if they were shifting But they were shifting. In Jan-Feb I was shifting C- 11.5% at par on a daily basis, at the same time as I was selling C and B at 12.5% and 13.5% with up to 3% premium. Then they just stopped moving. But the premium sales are irrelevant, because it's only Autobid that's buying poor quality loan parts, and Autobid doesn't look at anything with a premium. So par sales are almost a whole separate market. In the par market, the C- don't have a lot of competition on non-risk-adjusted buyer rates from other risk bands at present. Potentially more worrying would be the number of C- at better rates, up to 14%, but they aren't moving either. I don't know how Autobid chooses what to buy, but it doesn't seem to make any attempt to compare prices and pick the best bargains on behalf of its clients. Clearly though the main bottleneck is the amount of money it allocates to the secondary market. FC have always given the impression that they would sell overpriced loan parts at par to Autobid users who set low rates for fast lending speed, though it seems without actually setting up the system to make sure it happens. This is really a separate problem from the state of the manual market, though they both stem from the big increase in borrowing volume. Autobid is still buying a lot of loan parts at MBR in auctions, which won't be attractive to manual buyers any time soon unless there are more game-changing developments. Since it doesn't have to do this now to maximise lending speed, there isn't much excuse for it if it's the policy that these parts should now be discounted to sell. And it isn't going to fix itself, though Autobid might do some shopping while the auction trade is quieter over Easter.
|
|
|
|
Post by GSV3MIaC on Apr 11, 2014 7:49:25 GMT
If I were the FCA, the way autobid works, or rather fails to, on behalf of inexpert clients , would be near the top of my FC hit list. Of course without it the secondary market would probably barely function.
|
|
|
|
Post by GentlemansFamilyFinances on Apr 15, 2014 7:16:54 GMT
It's getting very slow to sell at the moment - even with almost all of my parts at 0% mark-up.
I'm getting about £1000 a day across 18 loans.
My analysis seems to suggest that the rate at which parts sell is no related to how many you have on the market for each loan - so 1x£100 loan will sell quicker than 5x£20 loans.
But AutoBid is a mystery to us all!
Once the 1% cashback season ends - I'll be removing all my loans from the marketplace and then relist at a mark-up that I think I can achieve a sale.
|
|
|
|
Post by GSV3MIaC on Apr 15, 2014 8:07:32 GMT
It ended,so maybe secondary market rates will come back down. Right now there's not much worth bidding on at all, property loan excepted.
|
|
