j
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Penguins are very misunderstood!
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Post by j on Apr 18, 2014 18:10:26 GMT
Do savingstream have or would they consider offering slightly riskier loans with higher rates (circa 15%) as opposed to the current 12% fixed offerings. Whilst the latter offer a good return nonetheless, SS might broaden its investor base if they offered a mixture of both. |
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Post by rudry2677 on Apr 18, 2014 19:10:59 GMT
Even though the higher interest rate would indicate higher risk I am not at all sure that it would be a good idea. One of the original P2B loan companies appear to have taken on too many higher risk businesses and have lost my and many other investors confidence. I do hope that that dubious path is avoided. Confidence is a major pillar in any organisation.
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andy2001
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Post by andy2001 on Apr 18, 2014 20:35:18 GMT
The way I understand it SS are guarantee to pay out on loans even if they don't get all the money from the borrower. unless this has changed. This seems to make the higher risk loan option less appropriate.
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Post by rudry2677 on Apr 18, 2014 20:57:35 GMT
The way I understand it SS are guarantee to pay out on loans even if they don't get all the money from the borrower. unless this has changed. This seems to make the higher risk loan option less appropriate. Not even the Government guarantees our major banks for more than about £85000 or so. Guarantees are never guaranteed when it hits the fan.
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j
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Penguins are very misunderstood!
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Post by j on Apr 18, 2014 20:59:39 GMT
Whilst I agree with j that there is a significant market out there for riskier/high return deals, I can also sympathise with rudry266's reservations for the same. In my experiences with both FC & TC, the problems and subsequent frustrations have arisen when riskier deals go sour because 'less sophisticated' lenders, who don't fully understand risk, and/or get caught up in eBay-style bidding wars on variable rate auctions, wonder why their 15% starting price loan parts that they ultimately bid down to single figure yields go, please forgive the expression, t*ts up. With proper due diligence, I'm not sure the same lack of confidence could be applied to any platform if a risk-relative fixed rate was applied, because the risk would be spelled out from the outset, so we'd only have ourselves to blame when/if a loan became distressed. I take both your points on board & agree wholeheartedly. The kind of higher loan risk I was referring to is similar to those sometimes offered on AC where instead of a property/bricks & mortar security, e might get a debenture or 1st charge on an order book, or a high ltv. Hence the higher rate offered. So, whilst there is a perceived higher risk, there is still enough security on offer to make it secure enough to get our money back, albeit not as tight as some other loans. I certainly wouldn't throw my hard earned cash chasing very high interest loans if they're not backed up by solid accounts & assets.
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mikes1531
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Post by mikes1531 on Apr 18, 2014 21:03:01 GMT
The way I understand it SS are guarantee to pay out on loans even if they don't get all the money from the borrower. unless this has changed. This seems to make the higher risk loan option less appropriate. I wouldn't call it a "guarantee" as much as a hope. Besides which, if they actually were to use the word "guarantee" I'd expect the FCA to come down on them like a tonne of bricks. (I think that word is reserved for FSCS-covered investments.) With respect to the possibility of having higher-risk loans, I'm not sure how that could be implemented. At the moment, Lendy make the loans and SS pass them along to lenders. The Lendy website homepage says "Our interest rates are from 2.49% per month (37.9% APR)." I don't know what controls the "from". Is it purely a function of the size of a loan at at FS? Or perhaps the LTV is a factor? If the former, then the difference is admin-related rather than risk-related. If the latter, then it would be risk-related. In that case, Lendy could start offering 70% LTV loans at higher rates to borrowers, and offload those onto SS lenders at a rate higher than 12%. But I'm not convinced that would be a good move. As another platform has shown, by the time a 70% LTV loan matures the amount owing will have increased to significantly above 70%, and if the borrower decides not to redeem their security, liquidating it and generating enough cash to pay back all of the lenders can be a challenge. (If a pawnbroker offers too much LTV, their borrowers will have an incentive to treat the transaction as a very quick sale rather than a loan.) And if Lendy/SS really do want to be able to keep their lenders whole in the case of defaults, they'll want to have minimal worries about LTVs being too high. A platform that can show that their lenders are reasonably insulated from defaults will have a very positive selling point, and offering higher-risk loans could undermine/counteract that. If I were SS, I wouldn't go there. But that's JMHO.
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andy2001
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Post by andy2001 on Apr 18, 2014 21:17:44 GMT
The way I understand it SS are guarantee to pay out on loans even if they don't get all the money from the borrower. unless this has changed. This seems to make the higher risk loan option less appropriate. Not even the Government guarantees our major banks for more than about £85000 or so. Guarantees are never guaranteed when it hits the fan. Well I know there's still risk. If SS goes bust the guarantee is not worth much. But this still makes higher risk loans less appropriate for the platform.
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Post by valerieb on Apr 25, 2014 9:38:51 GMT
I'm thinking of dipping a toe into SS to complement my FC, AC and TC investments. Can someone give me a rough idea of the volume of loans on offer? The site refers to all loans being asset-backed but I'm sure I've seen mention of PGs; perhaps that's in addition to assets?
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Post by savingstream on Apr 25, 2014 10:12:26 GMT
PG's are always in addition to asset/property security.
All loans are currently fully funded on our platform, but we hope to have new loans going live next week as well as the launch of a secondary market.
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ramblin rose
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“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Apr 25, 2014 10:15:36 GMT
The frequency and size of loans is very sporadic - sometimes a couple run together, more often one at a time and they vary between just a handful of thousands and in the past few months, hundreds of thousands. They've all been asset backed to date - mainly boats, a car and just recently a couple of property bridging loans. Unfortunately you've just missed out on the latest property loan which was offering cashback until the end of April - there was some left last night, but it's all gone this morning.
If you log into the site you can see a list of the currently live loans which shows you the size, and a list of loans in the pipeline which gives an indication of what stage of the pipeline they are at. Sometimes loans just appear at short notice without ever going into the pipeline though. There are often several weeks without any loan availability though.
The good point is that when there are loans to put your money into it earns interest with immediate effect - they are mostly already written when they go live, with the exception of the really large ones, but SS have still undertaken to pay interest immediately on even those up till now. And SS have promised us an aftermarket by the start of May.
Edit: The horse's mouth beat me to it!
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mikes1531
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Post by mikes1531 on Apr 25, 2014 15:14:25 GMT
I'm thinking of dipping a toe into SS to complement my FC, AC and TC investments. Can someone give me a rough idea of the volume of loans on offer? The site refers to all loans being asset-backed but I'm sure I've seen mention of PGs; perhaps that's in addition to assets? I won't say there aren't any PGs involved, but all I remember is tangible security on the car and the boats. Take a look at the Lendy Marine website. Lendy make the loans, and SS 'sell' parts of them on to lenders. One of the features of borrowing this way is, as they put it on their website... ... so it doesn't look like PGs are likely to be included. These loans tend to be at a LTV of 50% or less, so it ought not be difficult to sell the security of a defaulting borrower and raise enough to pay the lenders back with full interest. AFAIK, they've not had to do that yet. If they did, however, I expect it might take a bit of time to get an auction organised, so there'd be a delay before lenders would regain access to their money. This is partly why the loans on the website show as being 7-month loans whereas the agreement with the borrower is a 6-month loan. IMO, a month isn't enough time to go through all the procedures necessary to turn the security into cash, but I'm certainly not an expert in this field -- I'm not even sure I have enough experience to qualify as a novice! -- and there are no actual examples to refer to. And, to be honest, I'm glad that there are no examples. Bridging loans are a new venture for SS, with two arranged in the past month. The LTV on those were 62% and 70%. Compared to the info provided by AC, SS provide less info, so it's necessary to have a certain amount of confidence that Lendy/SS have done their homework and are making reasonable loans.
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spockie
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Post by spockie on Apr 25, 2014 16:07:18 GMT
I believe, from a previous reply, that one loan has gone belly up, and the boat was indeed sold and the lenders repaid. I'm sure savingstream can confirm and say how quick the process was. |
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Post by savingstream on Apr 25, 2014 16:17:10 GMT
Regarding the single default we have experienced, the borrower confirmed his intention before the end of the loan not to repay the loan, the boat sale was then organised and the boat sold.
The loan was made on 8/6/2013 and investors were repaid in full on 6/12/2013 (i.e. within 6 months)
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mikes1531
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Post by mikes1531 on Apr 25, 2014 16:25:06 GMT
Regarding the single default we have experienced, the borrower confirmed his intention before the end of the loan not to repay the loan, the boat sale was then organised and the boat sold. The loan was made on 8/6/2013 and investors were repaid in full on 6/12/2013 (i.e. within 6 months) Thanks for the definitive answer.
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Post by valerieb on Apr 25, 2014 20:11:54 GMT
Thanks for the info everyone. I've signed up (which was remarkably simple) and await the appearance of the promised new loans!
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