SteveT
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Post by SteveT on Oct 4, 2016 6:52:55 GMT
IMO, the main reason FS loans have been slower to fill recently is that their rate of new loan origination has been running ahead of their lender demand. There was a significant acceleration of new property lending in Q1 this year, so a lot of these loans have been renewing in Q3 on top of the continued flow of new loans. : Your explanation is plausible but FS is not operating in isolation. IMO a sizeable proportion of people investing in MT and SS also subscribe to FS. Loans at SS and MT are gobbled up almost instantly whereas FS struggles despite bonuses and higher interest. To my mind the differential takeup reflects to a larger extent confidence in the respective platforms. Perception of liquidity also plays an important role and FS is not obviously winning with that either. I was only talking about the recent period of loans taking longer to fill on FS (last couple of months), which I still ascribe to their ramp-up of new property lending in Q1 and the resulting bulge of renewals in Q3. Prior to this, FS has had little problem filling their loans and there have been extended periods of FFF, demands for smaller bid limits, etc. Other platforms have gone through similar periods where new loan supply runs ahead of lender demand, not least SS themselves who were adding cashback to get large loans filled as recently as last September, IIRC (which newer SS lenders may find surprising). Never assume that liquidity is a given; relatively modest swings in new loan supply can quickly flip secondary markets from famine to feast (and vice-versa).
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arbster
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Post by arbster on Oct 4, 2016 16:29:40 GMT
One thing I would say for FS is that they have a startlingly healthy pipeline and seem to be coming up with several SS-sized opportunities every week. I can't work out whether they're less popular than SS, and if so is it because the properties are less attractive security or the "complex" SM puts people off.
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Steerpike
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Post by Steerpike on Oct 4, 2016 16:39:32 GMT
Monthly interest, more attractive more modern looking website with prominent photographs, and INPL.
Game, set and match.
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arbster
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Post by arbster on Oct 4, 2016 16:52:29 GMT
Monthly interest, more attractive more modern looking website with prominent photographs, and INPL. Game, set and match. Ah yes, monthly interest. 12 birds in the hand are worth 13-16 birds in the bush...
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Post by martin44 on Oct 4, 2016 17:52:05 GMT
Two distinct advantages FS have over SS is cheaper lending and interest paid by the borrower at the end of the loan, If i was a borrower they would appeal far more to me than the SS model.
IMHO the FS model suits the borrower and the SS model suits the lender.
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Steerpike
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Post by Steerpike on Oct 4, 2016 18:59:37 GMT
Two distinct advantages FS have over SS is cheaper lending and interest paid by the borrower at the end of the loan, If i was a borrower they would appeal far more to me than the SS model. IMHO the FS model suits the borrower and the SS model suits the lender. As long as the borrower doesn't mind waiting ages to get the loan filled.
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Liz
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Post by Liz on Oct 4, 2016 19:15:38 GMT
Two distinct advantages FS have over SS is cheaper lending and interest paid by the borrower at the end of the loan, If i was a borrower they would appeal far more to me than the SS model. IMHO the FS model suits the borrower and the SS model suits the lender. As long as the borrower doesn't mind waiting ages to get the loan filled. And less likely to fill as well.
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micky
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Post by micky on Oct 4, 2016 19:44:48 GMT
Has FS had loans that have not filled recently?
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fp
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Post by fp on Oct 4, 2016 20:08:14 GMT
Has FS had loans that have not filled recently? A least one to my knowledge
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hantsowl
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Post by hantsowl on Oct 4, 2016 21:28:01 GMT
Has FS had loans that have not filled recently? A least one to my knowledge With the current throughput of new property loans at FS the situation is likely to get worse. They are taking longer and longer to fill despite increasing the rate to 13%, offering cashback and bonuses. The really annoying thing about FS is that non-property loans such as jewellery are virtually impossible to get unless you possess "super-FFF" abilities at the 11am release time.
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james
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Post by james on Oct 5, 2016 8:28:48 GMT
On pure interest terms FS looks like the clear winner because the interest is tax free for individuals if you can sell the loan before it is paid. That's a substantial premium over the Saving Stream effective interest rate for most individuals. I like monthly interest but I like receiving more interest more than that. Six months isn't a long time.
FS would also appear to be quite interesting for those who get interest tax free, either due to lower income or if they can hold in a SIPP or perhaps in the future an ISA. The secondary market buys at a discount to account for the tax liability then are a pure discount without the tax liability that prompted the seller to sell.
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adrianc
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Post by adrianc on Oct 5, 2016 9:36:10 GMT
On pure interest terms FS looks like the clear winner because the interest is tax free for individuals if you can sell the loan before it is paid. Not quite. You might be able to get somebody else to pay the tax for you, but that's a different thing entirely.
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james
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Post by james on Oct 5, 2016 11:39:57 GMT
On pure interest terms FS looks like the clear winner because the interest is tax free for individuals if you can sell the loan before it is paid. Not quite. You might be able to get somebody else to pay the tax for you, but that's a different thing entirely. True, not quite. There is no interest paid to you if you've sold the loan so it's not really tax free, just not existing at all. So there's no tax liability on the higher purchase price paid to you. At least as FS appears to believe things work for their particular situation.
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Brainer
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Post by Brainer on Oct 5, 2016 14:03:31 GMT
On pure interest terms FS looks like the clear winner because the interest is tax free for individuals if you can sell the loan before it is paid. That's a substantial premium over the Saving Stream effective interest rate for most individuals. I like monthly interest but I like receiving more interest more than that. Six months isn't a long time. FS would also appear to be quite interesting for those who get interest tax free, either due to lower income or if they can hold in a SIPP or perhaps in the future an ISA. The secondary market buys at a discount to account for the tax liability then are a pure discount without the tax liability that prompted the seller to sell. I'm not in FS but as a non-taxpayer this caught my attention. Do I have this correct? People sell at a discount on the FS SM to avoid/reduce tax, which isn't applicable to me so I can reap the full benefits of the discount? But won't they only do this right at the end of the loan term, so I won't actually benefit much or for long? And like other sites, near the end of the loan term is considered the riskiest time to hold? And presumably people will be more likely to do this on the perceived riskier loans (like the SS SM being full of negative day loans)? So, as a strategy this might not necessarily pay off long-term despite the discount benefits?
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james
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Post by james on Oct 5, 2016 16:09:59 GMT
Yes, that's how I understand things work.
Selling a the very end doesn't make much difference in the interest/income tax aspect because your'e relying on a discounted capital price plus the interest to the rest of the term. The longer the loan is held before sale, the greater the discount it takes to cover the anticipated income tax bill... the one that you won't end up paying.
You're right about the repayment risk aspect. That's another reason why on many platforms some people prefer to sell before the end of loan term. Whether the gain from the discounted price overcomes this is a matter for those doing the deals and the prices they set. I assume that lots of defaults would prompt larger discounts for sales near to end of term to persuade buyers to take the risk. It's potentially interesting say for couples where a spouse with no liability buys from the spouse who does. The seller might then be able to minimise the discount that they need to offer.
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