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Post by valueinvestor123 on Oct 28, 2016 15:14:43 GMT
What's going on with Savingstream lowering rates? I just noticed that I have to login to make sure I don't bid on the lower rate loans (they don't seem to me any less risky than the 12% ones and from experience with other sites, default does not always correlate with rate.
Fundingsecure offers 13% interest on similar types of loans so why are Savingstream worried that they are 'losing' loans to somebody else? (It seems secondary market is oversaturated currently in any case and is going to stay this way, given how many loans are being fed right now).
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am
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Post by am on Oct 28, 2016 15:23:46 GMT
What's going on with Savingstream lowering rates? I just noticed that I have to login to make sure I don't bid on the lower rate loans (they don't seem to me any less risky than the 12% ones and from experience with other sites, default does not always correlate with rate. Fundingsecure offers 13% interest on similar types of loans so why are Savingstream worried that they are 'losing' loans to somebody else? (It seems secondary market is oversaturated currently in any case and is going to stay this way, given how many loans are being fed right now). FC does development finance loans at 8% (sometimes more) and bridging loans at 10%. MT does loans at 9-13%. Nearly all loans at AC are now below 12% (some well below). And there's all the non-P2P lenders out there.
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ablender
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Post by ablender on Oct 28, 2016 16:06:35 GMT
What's going on with Savingstream lowering rates? I just noticed that I have to login to make sure I don't bid on the lower rate loans (they don't seem to me any less risky than the 12% ones and from experience with other sites, default does not always correlate with rate. Fundingsecure offers 13% interest on similar types of loans so why are Savingstream worried that they are 'losing' loans to somebody else? (It seems secondary market is oversaturated currently in any case and is going to stay this way, given how many loans are being fed right now). FC does development finance loans at 8% (sometimes more) and bridging loans at 10%. MT does loans at 9-13%. Nearly all loans at AC are now below 12% (some well below). And there's all the non-P2P lenders out there. Would have the non-P2P lenders lent money in this case?
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Post by valueinvestor123 on Oct 28, 2016 23:03:57 GMT
How can we know for sure that they are not just increasing the margin of profit?
I personally am not going to invest below 12% if the loans are more or less the same; I don't want to drive rates down further for other investors.
The risk of a large mis-valuation or fraud is not eliminated by having a lower rate and a (perceived) 'less risky' loan. LTVs will have to be VERY low and it certainly can't be a development loan.
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mikes1531
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Post by mikes1531 on Oct 29, 2016 1:38:31 GMT
How can we know for sure that they are not just increasing the margin of profit? We can't!
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registerme
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Post by registerme on Oct 29, 2016 5:07:28 GMT
/mod hat off In the abstract I don't have a problem with lower rates (shorter terms / better security / less risk etc), but it's beholden on savingstream to explain why they think it's worth my time, and their's. |
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duck
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Post by duck on Oct 29, 2016 5:43:00 GMT
OK I'm going to take a slightly controversial position and I do so on purpose.
Why are 'we' even questioning these changes?
Platforms have their business models which will change over time.
Investors have their cash.
Platforms want to grow/sustain their businesses and make a return. To do this they 'require' investors money so they need to have investors 'on side'.
Investors want a return from their cash preferably with no risk but since that is an impossibility it is the investors who decide the risk/return ratio they are prepared to accept.
Two interlinked balancing acts that can easily be thrown out of balance.
If I don't like a loan for any reason be that risk, return, lack of information, don't understand or just gut feeling I don't invest. If I don't like changes made by platforms I think 'thanks for the good times' and withdraw my cash.
Personally I don't have an issue with lower rate loans, it is all down to the particular loan. My SS investment level has remained relatively 'static' over the last 6 months and currently I see no reason why that will change, time will tell.
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Post by dualinvestor on Oct 29, 2016 6:52:30 GMT
What's going on with Savingstream lowering rates? I just noticed that I have to login to make sure I don't bid on the lower rate loans (they don't seem to me any less risky than the 12% ones and from experience with other sites, default does not always correlate with rate. Fundingsecure offers 13% interest on similar types of loans so why are Savingstream worried that they are 'losing' loans to somebody else? (It seems secondary market is oversaturated currently in any case and is going to stay this way, given how many loans are being fed right now). However it is dressed up the lowering of rates is an attempt, which will probably be successful, to reduce the cost of their raw material. In isolation 9, 10 or 11% seem a reasonable return to lenders by now used to much lower rates elsewhere, it is only when compared to what was previously offered that it seems miserly. It is exactly the same strategy as many businesses use of loss leaders, establish a good reputation and then cash in on the customer base that they have built. A lot of customers (lenders) will take what they say at face value and another group not even notice a few will question it, but at the end of the day SS will rely on their reputation to fund more business, which to be fair is what they said they would do, but, if the two lower rate loans that have been offerred so far are anything to go by, they are unlikely to be of much, if any, better value than what was previously offerred before. Despite a lot of people believing SS is alturistic and by calling the directors by the first name they are their friends it is a business that has little or no risk and profits (despite already being the most profitable P2P platform in the Universe) from writing more and more loans at whatever rate.
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mack
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Post by mack on Oct 29, 2016 7:54:41 GMT
What's going on with Savingstream lowering rates? I just noticed that I have to login to make sure I don't bid on the lower rate loans (they don't seem to me any less risky than the 12% ones and from experience with other sites, default does not always correlate with rate. Fundingsecure offers 13% interest on similar types of loans so why are Savingstream worried that they are 'losing' loans to somebody else? (It seems secondary market is oversaturated currently in any case and is going to stay this way, given how many loans are being fed right now). However it is dressed up the lowering of rates is an attempt, which will probably be successful, to reduce the cost of their raw material. In isolation 9, 10 or 11% seem a reasonable return to lenders by now used to much lower rates elsewhere, it is only when compared to what was previously offered that it seems miserly. It is exactly the same strategy as many businesses use of loss leaders, establish a good reputation and then cash in on the customer base that they have built. A lot of customers (lenders) will take what they say at face value and another group not even notice a few will question it, but at the end of the day SS will rely on their reputation to fund more business, which to be fair is what they said they would do, but, if the two lower rate loans that have been offerred so far are anything to go by, they are unlikely to be of much, if any, better value than what was previously offerred before. Despite a lot of people believing SS is alturistic and by calling the directors by the first name they are their friends it is a business that has little or no risk and profits (despite already being the most profitable P2P platform in the Universe) from writing more and more loans at whatever rate. Totally agree. We were told that loan rates were being to reduced to compete with other lenders. There is no evidence of this and the loans look exactly the same as before. Which other lender was competing with them for PBL145? It needs to be appreciated that p2p lenders can always take on riskier loans as the risk is spread across hundreds or thousands of individuals but NOT the platform. A non p2p lender will have their capital at stake and regardless of a valuation will not want to take on a loan with too much risk of default or protracted exit as it will cost them money. Investors not questioning saving streams strategy and profits is not advised as their will always be a certain conflict of interest between you the investors and the p2p lender as you carry all the risk... The new rates will deter larger investors as whats the point in having a small slice of a lower rate loan when there are plenty out there at 12% and above.
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Post by valueinvestor123 on Oct 29, 2016 8:03:54 GMT
It's very important not to forget that ALL these loans are extremely risky. Just because default rates have been relatively low in the past few years, investors are in danger of being lulled into a false sense of security. I have seen it with other investments and the story goes the same. I worry that the rates will get lower while the risk will in fact increase and one day, there will be a stampede to the exit.
In theory: yes, lower rates = lower risk would be fine with me however this is theory. And in practice all of these loans carry the same type of risk an the reason the rates may be driven down will be to investor greed (or perhaps platform greed, not sure which).
I am not taking up any loans with lower rates as I don't see them carrying any less risk.
I have several hundred k with Savingstream alone and am going to change platforms if I see the rates getting driven down. Liquidity is also important for me and if there are too many loans on secondary market, I will also be moving funds out. I hope Savingstream should take note of this and I encourage other investors to do the same.
vi123
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dan83
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Post by dan83 on Oct 29, 2016 8:04:31 GMT
I don't think lower rates will deter big investors, look at the other thread about this, a few BH's commented and seem to be happy with the changes as they are still getting a good rate.
If anything by us not taking a share of the lower rate loans is playing more into the large investors hands, because they have a bigger slice of the pie.
Me on the other hand, I'm the small investors who sells loans to invest in longer term loans. I will be holding onto my 12% loans until either another 12% long term loan comes around (which I'm not expecting) or my loans terms get to about 30 days.
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mack
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Post by mack on Oct 29, 2016 8:46:44 GMT
I don't think lower rates will deter big investors, look at the other thread about this, a few BH's commented and seem to be happy with the changes as they are still getting a good rate. If anything by us not taking a share of the lower rate loans is playing more into the large investors hands, because they have a bigger slice of the pie. Me on the other hand, I'm the small investors who sells loans to invest in longer term loans. I will be holding onto my 12% loans until either another 12% long term loan comes around (which I'm not expecting) or my loans terms get to about 30 days. I have a seven figure p2p portfolio overall. Savingstream was going to get seven figures from me at one stage. I now have over 50% less than peak (still a few hundred K) as it does not work well for a "BH". The lower rates make it less appealing unless they are genuinely lower risk or savingstream are genuinely competing for business and not lining their own pockets at me taking on the same risk.
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dan83
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Post by dan83 on Oct 29, 2016 10:18:28 GMT
No offence, but you are just one large investor there will still be plenty happy with the lower rate.
I have some money in bank accounts paying upto 5% interest, which is all coming to an end soon. It doesn't take a rocket sciencetist to work out 9% is a lot higher then 3%.
Even tho you have less of your money in SS, you probably still have more invested in SS then the smallest 100 investors combined, I think SS would miss you more then they would miss 100 of me.
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Post by pepperpot on Oct 29, 2016 11:51:29 GMT
No offence, but you are just one large investor there will still be plenty happy with the lower rate. I have some money in bank accounts paying upto 5% interest, which is all coming to an end soon. It doesn't take a rocket sciencetist to work out 9% is a lot higher then 3%. Even tho you have less of your money in SS, you probably still have more invested in SS then the smallest 100 investors combined, I think SS would miss you more then they would miss 100 of me. I'm not so sure (sorry mack), with 30 new sign ups per day, they only need one of those taking the plunge to the tune of £10k to displace a £300k investor per month and it's likely that up to 10 of those will be making some sort of deposit. It sounds like mack has reduced by a six figure amount (recently?) and there has only been a noticeable change in SM levels due to a large loan going live last week, £300k isn't much when spread around [say] 2000 investors (£150 each). It also doesn't take a rocket scientist to realise that an FSCS backed bank account is a lot less risky than non-FSCS backed bridging and development finance.
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Post by dualinvestor on Oct 29, 2016 13:09:52 GMT
In the bridging loan marketplace, as in any other part of the finance industry, there are undoubtedly loans that represent lower risk and when SS offerred a standard 12% it was probaby accepted by those that gave it any thought, that the return was a balance between higher and lower risk and took theiir lending decisions accordingly, I suspect most people however did not give it any thought and were just swayed by the 12%.
Now SS state that some loans will be offerred at lower rates. On an unbiased look at the current loan book some of those loans should have been offerred at higher rates (ad that is not solely with the benefit of hindsight many potential flaws in the security, LTV, borrower etc have been flagged up here well before the loan was made). If one carefully reads the SS website it says they charge borrowers an average 1.5% per month. Although it is early days since the change this has not yet been altered.
I submit that as there is no talk from SS of it we will not see loans offered at higher than 12% in the future, if any even reach those rates except lin cases where they are an effective roll over, like DFL008.
Therefore the purported reason of offering more better quality loans is IMO just a cover for SS's avariciousness.
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