annie
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Post by annie on Aug 29, 2016 21:28:19 GMT
Has anyone else noticed that recent loans are being financed by large value lenders? Lundin and LN1 users are pushing down our returns. Current loan as example (but noticed these lenders before) and at time of writing. C_F_ want £104K for marketing and refinance. Balance sheet shows outstanding loans of £94.5K so really just refinance. Yet Lundin & LN1 between them have offered £30K of the current offered £34.82K at 9.75% or less. My thought is these are local council or corporate treasury idiots with KPIs who just need to get a fixed return (say Ave 9.5%) and not caring about risk/ reward. If borrower is trying to push out repaying existing debt then that needs to be recognised. Surely at least 11% is fair to lenders.
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Post by lionelrichtea on Aug 29, 2016 22:33:53 GMT
It's not just recent loans, they've been taking these huge slices for a long as I can recall. There are 2 or 3 others that do the same. In some cases they have taken as much as 80% of the loan value. They are often early bidders and inevitably top up on closing day to ensure the loan is filled/control the average rate. This may or may not have resulted in some of us regular folk being outbid. Who are they? No idea!
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ablender
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Post by ablender on Aug 30, 2016 5:36:09 GMT
When I called Lending Crowd, they defined them as lenders which are known to them. According to LC, they are individuals. I see this activity as a way to manipulate the market. LC advertises that each band has a range of interest rates, yet they make sure that the top rates are never available. These people act as underwriters with the difference that underwriters come in at the end of a bidding period to fill in any parts of the loan that are not filled. These individuals are bidding throughout, and causing other peoples' bids to be rejected. This is why I say it is market manipulation with LC's blessing. I encourage people to call LC and complain. Also call FCA. Their number is on their website. Another thing you can do is add your comments to this thread: fca-helpAlso fca asks for emails to be sent with anything that we observe that need to be changed: crowdfundingcfi@fca.org.uk |
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annie
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Post by annie on Aug 30, 2016 11:38:47 GMT
Thanks for your replies guys. Interesting ablender - will look into 'reporting' . As you say, underwriters should be guaranteeing to borrower that loan will sell ( for a fee from the borrower) but they shouldn't be forcing down the market rate. Unfortunately there will be plenty of inexperienced lenders thinking they have to bid low to 'win' a slice of the loan, forgetting that their capital is at risk and that risk needs a proper reward. The banks would charge more for good reason.
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TheDriver
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Post by TheDriver on Sept 3, 2016 12:38:15 GMT
The counterpoint to this is that without the "rate-setting" big backers LC wouldn't have a viable operation, as few borrowers would accept a loan near the top rate, and there are not enough retail bidders to fill the loans anyway, so no-one would get any lending placed! I agree that the rationale of these bidders is questionable, as they seem to place bids based on how much is requested regardless of the apparent attractiveness of the proposal. However, more recently they have desisted from late bids, and rejections have been mainly caused by other retail bidders.
The 10% of bids by the big backers currently fill about 90% of the C_F_Ltd loan, which doesn't look particularly good for a long-term hold - a good example of querying their rationale, above. Their identity is an interesting point of conjecture. It almost seems like security of funds isn't a consideration - or are they secured in another way?
Overall, the rate-setters play a crucial role in LC's current operating model, and although a significant number of bids can be rejected it is usually possible to have bids accepted at or near the top rate; in some cases I have noted LC closing the loan early, effectively avoiding a cascade of rejections for fractions of %age - which is annoying and could be easily resolved.
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Post by GSV3MIaC on Sept 3, 2016 13:51:22 GMT
The 0.0x% cas(h)cade is just plain ridiculous, which I've been saying for nearly a year. Even FC's (previous) 0.1% was dumb .. if someone is going to get knocked out, at least make it meaningful, 0.25% minimum, better 1%.
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TheDriver
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Post by TheDriver on Sept 3, 2016 18:55:05 GMT
Bearing in mind that funds are tied up once a bid is placed, by changing bid increments from the current 0.05% to eg. 0.5%, would also give more reason to bidding earlier; at the moment a late bid can knock out a week-long bid - which represents around 0.25% - for a fraction of the potential cost!
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