ek
New Member
Posts: 3 
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Post by ek on Aug 11, 2016 14:19:00 GMT
ek , sorry, kind of hijacked your thread  . haha No worries. It is good to read others opinion on the subject
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Post by Financial Thing on Aug 11, 2016 16:03:56 GMT
If you look at the current state of the stock market, financial fundamentals have flown out the window (high debt, low earnings, anemic growth) and the bull market is purely running on consumer sentiment (stocks going up, people have rosy outlook). Once that consumer sentiment changes, the market will change. I believe p2p is similarly hinged on consumer sentiment.
I think investor confidence will be the bigger problem. If the prop market crashes, p2p lenders will head for the exits in droves, and if burned badly enough, it will take them some time time to return. If the lenders leave and the p2p companies can't fund loans and end up in administration, existing loans will be in the hands of 3rd parties and as there isn't any past precedent of a p2p property platform going under, we really have no idea what will happen.
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Post by landbayceo on Aug 12, 2016 18:51:05 GMT
Hi
I thought that I would respond to this considering the stress test was mentioned. We put our book & pipeline thru a stress test last year. We based it on the BofE stress criteria at the time - which were broadly in line with what happened in 2008. We commissioned a mortgage analytics company to do it - they act for a number of the biggest mortgage lenders in the UK & US. Obviously we paid them to do it and in that sense a commercial relationship exists!
Basically they have huge amounts of data of how individual BTL mortgages have performed thru the crisis and thus they could create a portfolio that was similar to ours and run it thru various simulations. In addition there is huge amount of data that exists from CML on BTL and Securitisations such as Paragon (where our Head of Lending oversaw the credit function).
I personally felt that it was a useful exercise. Obviously they are not perfect and they have flaws - in particular every downturn is different. However it gives some idea of what might happen and it also influenced our thinking on our lending criteria - various types of loans performed worse than we thought and some performed better etc.
Im happy to answer any questions about it - and I agree that stress tests should be treated with caution - they are not predictions or forecasts & obviously loans could perform significantly worse (or better) than our stress test suggested. However I do believe that they perform a useful purpose for both the platform & their users.
John
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