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Post by meledor on Oct 23, 2016 14:12:28 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.
We tend not to get much information from the platforms on their margin and hence total borrower rate for each loan. You say that Ablrate does provide this - where is that on their website for the M***** Br****** loan for instance?
My risk is linked to the security and the borrower. Provided I have sufficient information on these I can work out the related risk (credit/asset) I'm taking therefore I can determine that without knowing the platform profit margin. What is more difficult is platform risk with the platform's ability to determine its profit margin subject to competition between platforms. Therefore it is important to me that the platforms I use are uncomplicated, simple to use and profitable. How does Ablrate shape up in these terms?
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james
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Post by james on Oct 23, 2016 15:21:37 GMT
We tend not to get much information from the platforms on their margin and hence total borrower rate for each loan. You say that Ablrate does provide this - where is that on their website for the M***** Br****** loan for instance? Not currently available for that one, don't know if it was at the time the loan was offered, but I suppose that's why you picked it. I took the example from the new loan currently available. Looking through some loans I hold there I find that the details are currently provided for these: A* P* F* secured property loan: 12% to lenders before compounding, go look to see platform cut. M* T* F* July: 12% to lenders before compounding, go look to see platform cut. Not all loans but those three are enough to give some idea. So where can comparable information be found about even one loan that Saving Stream has made? I don't assert that all other platforms provide these details or that those which do do it for all loans. My risk is linked to the security and the borrower. Provided I have sufficient information on these I can work out the related risk (credit/asset) I'm taking therefore I can determine that without knowing the platform profit margin. What is more difficult is platform risk with the platform's ability to determine its profit margin subject to competition between platforms. Therefore it is important to me that the platforms I use are uncomplicated, simple to use and profitable. How does Ablrate shape up in these terms? If the platform is taking more for the same loan than another platform and the borrower is paying the same, you're getting that much less for the risk you're taking on the loan than you could on the platform taking the lower cut. Are you really going to ignore the same borrower with the same borrower interest rate and security on two different platforms, one paying lenders more than the other, if you rate the platform risk the same?
If I recall correctly Ablrate has been operating profitably for some time, as has MoneyThing. I find the place easy to use, though their new programming team is gradually working through a useful range of improvements, as is the one at say MoneyThing. Actually considerably easier to use than say Saving Stream, where a large bucket of salt has to be used in evaluating every loan proposal to try to find out what isn't being decently, if at all, disclosed. That creates a lot of extra work and some cost in getting the reports required to evaluate the deal. Even then it can't be certain that all has been discovered, with say the ownership interest in a borrower not being knowable if not disclosed until after the reporting to Companies House some time after the fact.
Platform risk is a big deal. There's no interest rate differential that Saving Stream could offer that would cause me to favour a loan via Saving Stream vs either Ablrate or MoneyThing. In fact, no credible rate that would cause me to be willing to take the risk on Saving Stream's own conduct, regardless of borrower risk factors. I rate them as having a higher raw platform risk level than Bondora, based on the conduct of each, before the Financial Ombudsman risk reduction effect is considered.
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mikes1531
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Post by mikes1531 on Oct 23, 2016 16:12:44 GMT
So where can comparable information be found about even one loan that Saving Stream has made? : I don't know of any info SS have released about specific loans. They did, however, post some info about Lendy's standard terms -- basic interest rate, up-front fees, exit fees, etc. -- on this forum at one time. I haven't gone searching for that message, but you might be able to find it. Or someone who knows where it is might save you the trouble and post a link here. Of course, that info was posted some time ago, and Lendy's terms could be different now. And I haven't a clue how flexible they are, such that individual loans might have terms that are different from their standard ones.
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mikeh
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Post by mikeh on Oct 23, 2016 16:35:52 GMT
So where can comparable information be found about even one loan that Saving Stream has made? : I don't know of any info SS have released about specific loans. They did, however, post some info about Lendy's standard terms -- basic interest rate, up-front fees, exit fees, etc. -- on this forum at one time. I haven't gone searching for that message, but you might be able to find it. Or someone who knows where it is might save you the trouble and post a link here. Of course, that info was posted some time ago, and Lendy's terms could be different now. And I haven't a clue how flexible they are, such that individual loans might have terms that are different from their standard ones. ?
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Post by pepperpot on Oct 23, 2016 16:51:55 GMT
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Oct 23, 2016 17:01:29 GMT
So where can comparable information be found about even one loan that Saving Stream has made? : I don't know of any info SS have released about specific loans. They did, however, post some info about Lendy's standard terms -- basic interest rate, up-front fees, exit fees, etc. -- on this forum at one time. I haven't gone searching for that message, but you might be able to find it. Or someone who knows where it is might save you the trouble and post a link here.Of course, that info was posted some time ago, and Lendy's terms could be different now. And I haven't a clue how flexible they are, such that individual loans might have terms that are different from their standard ones. If only somebody kept such info in one easy to find place (well two but you can get to the other from the one)!  Anyway I see MikeH has already found it and Pots highlighted its repeated in the presentation (also noted in the second place)
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Post by meledor on Oct 23, 2016 18:43:49 GMT
We tend not to get much information from the platforms on their margin and hence total borrower rate for each loan. You say that Ablrate does provide this - where is that on their website for the M***** Br****** loan for instance? Not currently available for that one, don't know if it was at the time the loan was offered, but I suppose that's why you picked it. I took the example from the new loan currently available. Looking through some loans I hold there I find that the details are currently provided for these: A* P* F* secured property loan: 12% to lenders before compounding, go look to see platform cut. M* T* F* July: 12% to lenders before compounding, go look to see platform cut. Not all loans but those three are enough to give some idea. So where can comparable information be found about even one loan that Saving Stream has made? I don't assert that all other platforms provide these details or that those which do do it for all loans. My risk is linked to the security and the borrower. Provided I have sufficient information on these I can work out the related risk (credit/asset) I'm taking therefore I can determine that without knowing the platform profit margin. What is more difficult is platform risk with the platform's ability to determine its profit margin subject to competition between platforms. Therefore it is important to me that the platforms I use are uncomplicated, simple to use and profitable. How does Ablrate shape up in these terms? If the platform is taking more for the same loan than another platform and the borrower is paying the same, you're getting that much less for the risk you're taking on the loan than you could on the platform taking the lower cut. Are you really going to ignore the same borrower with the same borrower interest rate and security on two different platforms, one paying lenders more than the other, if you rate the platform risk the same?
If I recall correctly Ablrate has been operating profitably for some time, as has MoneyThing. I find the place easy to use, though their new programming team is gradually working through a useful range of improvements, as is the one at say MoneyThing. Actually considerably easier to use than say Saving Stream, where a large bucket of salt has to be used in evaluating every loan proposal to try to find out what isn't being decently, if at all, disclosed. That creates a lot of extra work and some cost in getting the reports required to evaluate the deal. Even then it can't be certain that all has been discovered, with say the ownership interest in a borrower not being knowable if not disclosed until after the reporting to Companies House some time after the fact.
Platform risk is a big deal. There's no interest rate differential that Saving Stream could offer that would cause me to favour a loan via Saving Stream vs either Ablrate or MoneyThing. In fact, no credible rate that would cause me to be willing to take the risk on Saving Stream's own conduct, regardless of borrower risk factors. I rate them as having a higher raw platform risk level than Bondora, based on the conduct of each, before the Financial Ombudsman risk reduction effect is considered.
I chose M***** Br****** because it was a typical recent non-aircraft loan (Ablrate would not disclose their fees on aircraft loans because of the link with the borrower) and where the borrower was not a finance company. It is good that Ablrate have now started to disclose this information.
You seem to be trying hard to advertise other platforms on this SS board. I have a number of Ablrate loans but never invested the amount I wanted to because 18 months ago they inexplicably stopped writing new aircraft loans. There are also some complicated aspects like their treatment of instant returns and the associated tax position with that and disposals that made it less appealing. You are not correct when you say that Ablrate has been operating profitably for some time. The last published accounts show a £366k loss for the year and I wonder whether it has got the resources to achieve a critical mass in the P2P industry. It would certainly help in this regard if it could get back to writing aircraft loans again, I certainly would find the platform more attractive if it did.
You are entitled to your views on SS. I happen to think SS are a good platform that offers lenders a great deal but all this is not really germane to your original point. I have explained why for me if I am happy with the lender rate given the security and credit assessment of the borrower, the platform margin does not matter as it operates in a competitive market, provided the platform has good profitability. If it does not have good profitability then it is either underpricing itself (total borrower cost is less than it should be) to gain market share or it is a marginal business with all the heightened platform risk that that entails.
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mikes1531
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Post by mikes1531 on Oct 24, 2016 1:18:07 GMT
Or someone who knows where it is might save you the trouble and post a link here. ? : That's the one! Thanks.
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james
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Post by james on Oct 24, 2016 1:26:47 GMT
If only somebody kept such info in one easy to find place (well two but you can get to the other from the one)! Yes, it would be interesting, particularly for anyone who thinks there's any relationship between borrower total cost and risk. A now quite old paper on Prosper linked to by Bondora showed that it was borrower interest rate that was the biggest determinant of risk being taken. Assuming the efficient market hypothesis is true (a big assumption) this means that platform cost is a big deal because it's the way returns to lenders can be increased or decreased for the same loan risk level. Thanks mikes1531, mikey and pepperpot, good to see at least some numbers. Personally I think it's sensible for Saving Stream to be varying the rates but how the split between lenders and platform changes and what that implies for risk-return change for lenders is significant. I have explained why for me if I am happy with the lender rate given the security and credit assessment of the borrower, the platform margin does not matter as it operates in a competitive market, provided the platform has good profitability It's your assertion that the platform margin doesn't matter that I was disagreeing with, since for a given loan in efficient market that is what determines how much return is left over for lenders. If a platform has consistently higher charges than its competitors that must mean that all other things being equal the lenders are getting a lower risk adjusted return. You can be happy with that return but it'd mean that a higher one for the same borrower risk level is available somewhere else. Though it's important to consider the value of any protection funds in such comparisons, since they have a non-trivial cost to deliver their benefit. As MoneyThing observed about their recent accounts filing, the fact that there was a loss for a year didn't conflict with them operating profitably since that can change within a year and did. The latest accounts I see for Ablrate aren't meaningful since they are the ones filed on 25 November 2015 for the period to 28 February 2015 for a dormant company. Similar not recent enough to be useful for a growing business issue for Avation and Tech Capital. Though my guess is that legal cost in relation to a default might have switched from month to month operating profit to operating loss for a while at the moment. But this is somewhat moot since it's quite tangential to the question of whether the split between platform and lenders matters and that's what I'm trying to discuss. There are also some complicated aspects like their treatment of instant returns and the associated tax position with that and disposals that made it less appealing. I don't find most of that problematic since much of it just comes out in my spreadsheet calculations or their tax statement. But it is more complicated than some, the price for being able to make profits or losses on the secondary market. That's been quite profitable for me so it's pretty natural that I'd consider it to be worthwhile. Will be good when their improved reporting is available since some aspects of this are quite fiddly to deal with.
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elliotn
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Post by elliotn on Oct 29, 2016 15:35:05 GMT
9% for 70% ltv residential and c10% for piece of land with student accoms PP. Don't we already have same/better for 12%?  |
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Post by GSV3MIaC on Oct 29, 2016 15:47:37 GMT
/mod hat off
We do yes; unless we have accounts with other P2P platforms in which case we have to make do with a miserly 13% or 14%.
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bigfoot12
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Post by bigfoot12 on Nov 11, 2016 16:58:41 GMT
... So the lender is receiving just 41.2% of the borrower's cost of funding. ... So lenders might be receiving anything from 35% to 61% of the overall borrower cost of funding. My main conclusion is that nearly all bridge lending platforms, from the biggest such as LendInvest to the smallest, typically offer the lender just 40-60% of the actual borrower proceeds, which demonstrates the margin that's being take out. ... retail lenders are paying away bigger margins, irrespective of performance. In a downturn that might not be pretty. has Welleseley's payout to the lender at barely 20% (2.25% rates with 8% net interest margin).
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registerme
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Post by registerme on Nov 12, 2016 3:12:17 GMT
I was looking at VIX yesterday and... struggling to make sense of it (in the context of blah...). That aside, how does a retail investor "buy vol"?
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Post by valueinvestor123 on Nov 12, 2016 10:46:02 GMT
"That aside, how does a retail investor "buy vol"?"
Depends. Volatility of what? Volatility of market, you can go long or short on the VIX via IG Index for example (I would advise against it; the spreads are horrendous and rollover costs ridiculous. Unless a crash happens next week, impossible to make money).
If you want to bet on volatility of peer2peer loans, you could ask Goldman Sachs to repackage these as CDOs and short the lot.
Otherwise shorting public peer2peer companies is possible and easy.
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bigfoot12
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Post by bigfoot12 on Nov 12, 2016 11:19:36 GMT
how does a retail investor "buy vol"? There are a lot of good reasons why many of these products aren't available to the retail investor so be careful. Ahead of the EU referendum I bought quite a few option products on IG.com. The options available are reasonably short term, but that didn't matter as the date was fixed. IG have options on most equity indices and major FX rates out to March, and oil and gold to Feb. Sadly they don't have any fixed income options that I can see. VIX isn't my thing - I have never had a position in it, but given that to me it looks low given what's going on that might change very soon. I have investments on three platforms one has a large range of VIX ETFs and ETNs, one has just one and another has none. I will probably stick to IG which has lots. I have crossed out that it looks low, not because it doesn't, but because not everything that I can buy looks cheap at first glance. Hopefully samford71 will have some good suggestions when he has had some sleep.
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Anyway I see MikeH has already found it and Pots highlighted its repeated in the presentation (also noted in the second place)
