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Post by supernumerary on Oct 13, 2016 19:38:31 GMT
From my own perspective I would like all the loans to still be at 1% per month, 12 % per year... 
As it is a competitive market place and Saving Stream are having to turn away business because they can't match their competitors, then at least investors will have a choice of whether to invest or not in these lower interest rate loans.
I am sure that Saving Stream will do their best for us lenders who are investing in the Saving Stream platform and that there will still be new 12% loans coming on stream. However, in the future, there will be some loans at lower rates for some of the loans.
I have always been selective about the loans I have invested in any way, so I now have another variable to consider, when evaluating whether to invest or not. 
I respect those posters on here, who are questioning the 'thin end of the wedge' approach, for a slow but gradual reduction in rates on the platform, but IMHO, customer resistance will prevail to stop that, due to the competitiveness of other platforms attracting good rates to lenders...
So Saving Stream will have to be mindful of that! There are other platforms that offer 12% to lenders with good quality PBL loans that stand up to rigorous DD. Yes MT offers PBL loans at 11% but these generally have the borrower standing the first 5% of any loss. The general concern is that savingstream have continued to ignore the criticism of they way they present the Valuation documents, the preparation of the LTV's and the general DD that the carry out prior to presenting loans. AC have a Risk Assessment matrix for each loan which lenders can view. There is a Q & A for each loan with reasonably good response times. Have a read of this www.4thway.co.uk/assess-p2p-lending-websites/Thanks Jaydee for the reply, I have been looking at Money Thing website; www.moneything.com/p2p/Some interesting loans on offer. 
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ben
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Post by ben on Oct 13, 2016 19:38:58 GMT
I agree I much prefer the MT ones, however the 5% first loss by broadoak in case of default only reduces the LTV. So if SS was to offer similar rates at similar LTV then there is no reason why they wiill not be just as populur.
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averageguy
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Post by averageguy on Oct 13, 2016 20:11:48 GMT
Bear in mind there are probably reasons for cynicism ... SS needs to ascertain what they are. (How's PBL 064 shaping up, by the way? Vic behaving?) So not possibly? Definitely probably?
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jonah
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Post by jonah on Oct 13, 2016 20:21:52 GMT
The 5% first loss thing is nice but remember the displayed LTV takes that into account and I assume this just reduces the broadoak margin, so they still make money just less of it.
That said, the quality of most broadoak loans is imo excellent and I'm invested in most and would like to see more offered.
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averageguy
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Post by averageguy on Oct 13, 2016 21:23:58 GMT
Don't get me wrong, I like MoneyThing but be aware that they have fewer different borrowers than SavingStream. It's easy, if you're not careful, to lend more than you intend to a single borrower. They *are* getting more borrowers all the time though. Very true and i prefer to spread my risk...but that also applies to platforms
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ablender
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Post by ablender on Oct 13, 2016 23:22:22 GMT
If interest rates start changing, I assume that this will not only apply to PBLs but to DFL's as well. In this case does it make sense that DFL's should have much higher interest rate? I ask as I understand that DFL's have higher risk.
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stevio
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Post by stevio on Oct 14, 2016 8:06:02 GMT
While this is true SS do offer some perks too: Interest pre drawdown even if it falls through, INPL and I think the intention (if not the guarantee) of covering bad debt. I wasn't really picking on SS or any other specific platform. Broadly my point is that the margins taken by all P2P bridge lending platforms are large. Some of that margin stems from the fact there are many mouths to feed. Brokers/introducers take 2% upfront, underwriters, if used, can take another 2% (I've been an underwriter on 2 platforms so I have experience of that). SS is probably lowering rates because it's been operating at the higher risk/higher yielding end of the bridging market and by definition that isn't scaleable. The average rate paid by a borrower in the bridge market is around 12%-13% + upfront fees, with average LTV around 47%, so SS are currently potentially missing out on a big segment of the market. Nonetheless, even accounting for broker/underwriters costs, the idea that platforms cannot absorb further compression between borrower and lender rates is not borne out by the numbers. Of course they don't need to absorb any margin compression because industry data indicates that borrower demand for bridge loans is still rising rapidly (and things like the MCD will exacerbate this). On the other side, retail lenders are just desperate for high yield carry products. So P2P platforms are exploiting that opportunity. What I find odd is that retail lenders are so complacent about the margin that they are paying away to the platform. Would they be equally happy to let a fund they invested in charge a management fee of say 5-10%? Because effectively that is the sort of fees retail lenders are paying to bridge platforms. I pay a 2% management fee and 25% performance fee on LendInvest's SICAV fund and it's easily outperformed their "no-fee" retail P2P platform in 14/15/16. Moreover, at least most of the fees I pay depend on their performance, the retail lenders are paying away bigger margins, irrespective of performance. In a downturn that might not be pretty. It would help if savingstream explained their fees and our rates like the above (ie how do all the interest and fees then turn into the chunks for our interest and their profit and how they anticipate this will change) In that way we can see that its not just the lenders taking a hit, but SS too.
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registerme
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Post by registerme on Oct 14, 2016 8:44:55 GMT
I agree, and not just with respect to SS.
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registerme
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Post by registerme on Oct 14, 2016 10:19:57 GMT
It may not be a "fair" comparison, but it is an illuminating one.
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jfm
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Post by jfm on Oct 16, 2016 7:41:24 GMT
Is it not clear that this is just market economics?
There is no "correct" rate for anything outside of a planned economy with no competition.
Sellers can offer at any price they like, but is it up to the buyers whether to accept.
Likewise buyers can bid at any price, but the sellers have a choice to accept.
If the price doesn't work for both, there is no deal.
There is a market situation to borrow funds, to lend funds, and also for intermediaries (with a "price" for their margin).
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Liz
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Post by Liz on Oct 22, 2016 9:33:29 GMT
"As you can see from the graph above, the requested amount for loans significantly outweighs the allocated amount that investors are receiving. We now want to bring demand and supply closer together, as fairly as possible.
"
How quickly things change.
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1stwaz
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Post by 1stwaz on Oct 22, 2016 21:22:43 GMT
IMHO if it does mean that the current level of 12% loans stays the same extra loans at a lower rate would not be a problem. Every loan should be judged on its own level of risk. However what attracted me here in the first instance was the 12%.
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james
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Post by james on Oct 22, 2016 23:59:34 GMT
What SS make on a loan does not really concern me and I do not see this level of scrutiny of other platforms' profit margins. It should be a matter of interest to you because it affects the rate the borrower is paying and if markets are efficient that would mean that a higher profit margin with the same lender interest rate is a more risky loan. So far as other platforms go, a currently open Ablrate loan is to pay: 1. Lenders 14% annual before compounding, so 1.667% a month. 2. Platform 0.5% a month. 3. Platform 2% initial fee. Not much thinking or research needed because this is disclosed for every loan they make, no speculation needed. If a platform was getting say 1% a month and the rest of the terms were the same that'd mean an extra 6% a year before compounding added to the borrower's loan cost and corresponding increase in efficient market risk being taken by the lenders. Costs to fund a protection fund would also increase the raw risk level but with some benefit in the form of the protection fund if that risk becomes reality. Similarly, if a platform decided that to get a loan it was necessary to charge the borrower 1% a year less, it matters how that 1% is paid for. If it's all paid for by a reduction in the rate paid to lenders the platform revenue is unaffected but those taking the investment risk now get 8.9% less revenue for the almost the same risk level (assuming the cheaper borrower rate means lower risk not more competition).
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Post by meledor on Oct 23, 2016 8:33:21 GMT
What SS make on a loan does not really concern me and I do not see this level of scrutiny of other platforms' profit margins. It should be a matter of interest to you because it affects the rate the borrower is paying and if markets are efficient that would mean that a higher profit margin with the same lender interest rate is a more risky loan. So far as other platforms go, a currently open Ablrate loan is to pay: 1. Lenders 14% annual before compounding, so 1.667% a month. 2. Platform 0.5% a month. 3. Platform 2% initial fee. Not much thinking or research needed because this is disclosed for every loan they make, no speculation needed. If a platform was getting say 1% a month and the rest of the terms were the same that'd mean an extra 6% a year before compounding added to the borrower's loan cost and corresponding increase in efficient market risk being taken by the lenders. Costs to fund a protection fund would also increase the raw risk level but with some benefit in the form of the protection fund if that risk becomes reality. Similarly, if a platform decided that to get a loan it was necessary to charge the borrower 1% a year less, it matters how that 1% is paid for. If it's all paid for by a reduction in the rate paid to lenders the platform revenue is unaffected but those taking the investment risk now get 8.9% less revenue for the almost the same risk level (assuming the cheaper borrower rate means lower risk not more competition). You have taken my comments out of context. The rate the borrower pays is the same, what was being discussed was the share between lender and platform.
Saving Stream have announced that they want to offer a lower cost to borrowers to win more business and are proposing to reduce rates below 12% for some loans to enable this. Some have suggested that SS should confirm that thay are reducing their profit margin so that the relative share between platform and lender is maintained.
It is in this context, that is for a given rate to the borrower, I do not care how much is the platform margin (other than I want it to be sufficient for the platform to make good profits which seems to be the case for Saving Stream).
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james
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Post by james on Oct 23, 2016 9:55:42 GMT
If the borrower rate is the same so that the raw risk is the same then you also have a reason to care what the platform takes because that means you get more or less money for taking the same raw risk.
Before allowing for the effect of a protection fund or other protection, which also has a cost deducted from your cut but can modify the risk profile in a useful way particularly for lenders with low diversification.
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