hazellend
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Post by hazellend on Jun 14, 2017 17:04:10 GMT
The SM will not come down unless and until most of the following happen: - they clear a large proportion of the defaults - they launch their ISA - they stop issuing more new loans than what's being repaid - they allow trading on the SM at discount/premium (you'll never balance supply and demand in a market where you can't adjust price - simple economics) Lendy are attempting to grow their business so they have to generally issue more loans (in value) than are being repaid.
I think the problem is that they're not finding new lenders quickly enough. Currently, they are generating too many new loans and there isn't enough money to go round. That affects confidence which makes matters worse.
I certainly agree that a slow down of new loans is necessary but they are unlikely to reduce it to the level of repayments. All your points would help with the possible exception of allowing discounts and premia on the SM: that change could well turn some people off.
discounting would improve liquidity so don't see why it would turn people off more than not being able to shift their loan part if they want to in a hurry.
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stevio
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Post by stevio on Jun 14, 2017 17:36:24 GMT
But let's not forget that the people who were derided as idiots on here for buying into the garden centre loan when it was in default turned out to be winners - receiving 100% of their capital back plus 12% interest on top! Equivalent in risk to riding a rollercoaster by hanging onto the sides - yes you might say they were winners at the end - but risking everything on the ride!
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Post by df on Jun 14, 2017 19:19:25 GMT
The SM will not come down unless and until most of the following happen: - they clear a large proportion of the defaults - they launch their ISA - they stop issuing more new loans than what's being repaid - they allow trading on the SM at discount/premium (you'll never balance supply and demand in a market where you can't adjust price - simple economics) Lendy are attempting to grow their business so they have to generally issue more loans (in value) than are being repaid.
I think the problem is that they're not finding new lenders quickly enough. Currently, they are generating too many new loans and there isn't enough money to go round. That affects confidence which makes matters worse.
I certainly agree that a slow down of new loans is necessary but they are unlikely to reduce it to the level of repayments. All your points would help with the possible exception of allowing discounts and premia on the SM: that change could well turn some people off.
I think the key problem is lack of repayments. There was one today (congratulations!!!!! ), but that's not enough, these should be coming much more often. This puts off current and new potential lenders. As for premiums/discounts. It could help the queues to move a little faster, but I don't think it can resolve the problem.
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twoheads
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Programming
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Post by twoheads on Jun 14, 2017 20:19:00 GMT
But let's not forget that the people who were derided as idiots on here for buying into the garden centre loan when it was in default turned out to be winners - receiving 100% of their capital back plus 12% interest on top! Your comment is like someone playing Russian roulette who holds the gun to their head and fires. Turns out to be an empty chamber , and they say, "You see, this game isn't dangerous at all !!" Equivalent in risk to riding a rollercoaster by hanging onto the sides - yes you might say they were winners at the end - but risking everything on the ride!
Looks like lobster and stevio have a very similar view concerning a high risk strategy!
I don't fancy either of those 'games' much. But if push came to shove I'd definitely take the rollercoaster option.
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GeorgeT
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Post by GeorgeT on Jun 14, 2017 20:29:19 GMT
Metaphorically speaking, we are probably all driving in the rain on bald tyres.
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Liz
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Post by Liz on Jun 14, 2017 20:31:38 GMT
Metaphorically speaking, we are probably all driving in the rain on bald tyres. In a storm with slicks more like! The SM will bloat again tomorrow too. Maybe 2 loans with £1m+ available.
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Jun 14, 2017 21:09:54 GMT
How high will the SM go in June? £10m?
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rxdav
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Post by rxdav on Jun 14, 2017 21:28:19 GMT
Oh dear - not sure that the best response to controlling an increasingly out of control blaze is to throw petrol on it? However, it seems this is the current Ly approach. I'm getting increasingly concerned at the lack of any obvious strategic thinking at Ly. The apparent 'dash for growth at all costs' would not be the first suicide note so worded!
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Post by df on Jun 14, 2017 22:43:42 GMT
What's going to happen to 12/19/24 projects if these 3 tranches don't get funded?
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ozboy
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Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on Jun 14, 2017 23:09:21 GMT
What's going to happen to 12/19/24 projects if these 3 tranches don't get funded? 
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GeorgeT
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Post by GeorgeT on Jun 15, 2017 1:21:08 GMT
Jonah's graphs are really coming into their own now and making a statement.
I have to admit I have contributed to the glut and now have approximately 50% of my entire stake up for sale.
However I urge others to stay calm and remember that we only need one or two big repayments to get back on track.
DD specialists may be taking comfort from their in depth investigations now that holding to term and hoping for the best looks to be more likely on a number of loans.
Suddenly 12% doesn't seem so generous. Cashbacks may need to make a return.
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Post by df on Jun 15, 2017 2:19:32 GMT
I have to admit I have contributed to the glut and now have approximately 50% of my entire stake up for sale. I have about 10% up for sale (less guilty than you are). I'm now considering different strategy. Stop selling, stop looking at pipeline, close my eyes, shut my ears and hope that one day some of them will be repaid  I might be wrong, but I see this as the way forward. There is no more easy exit strategy on Saving Stream. There are lots of hopes (e.g. next repayment, next interest run etc.), but in reality the queues get longer and longer.
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Post by loftankerman on Jun 15, 2017 7:34:04 GMT
I have to admit I have contributed to the glut and now have approximately 50% of my entire stake up for sale. I have about 10% up for sale (less guilty than you are). I'm now considering different strategy. Stop selling, stop looking at pipeline, close my eyes, shut my ears and hope that one day some of them will be repaid I might be wrong, but I see this as the way forward. There is no more easy exit strategy on Saving Stream. There are lots of hopes (e.g. next repayment, next interest run etc.), but in reality the queues get longer and longer. I have nothing up for sale. I decided to reduce my holdings in early April and sold about 60%. Most of it had zero length queues when I sold but a couple took a few days. I'll sit it out the same as you. I have money in another platform where there is no secondary market escape route but I'm not losing sleep over that. They are very transparent and well managed. I was one of the five complainants in the Ombudsman inquiry into Equitable Life so I'm philosophical about waiting years for my money and then not seeing much of it anyway. There's more to life.
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username
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Post by username on Jun 15, 2017 7:51:23 GMT
What's going to happen to 12/19/24 projects if these 3 tranches don't get funded? Presumably, LY will use underwriters and slowly releases the shortfall onto the SM. They may also have some capital available from the bonds I don't understand how the relationship with the underwriters works. With insurance I assume the underwriters are paid a fixed charge to cover the risk of needing their services, and they base the charge on the risk. The risk of not filling loans appears to have increased substantially, so does that mean Lendy will struggle to find/afford underwriters in the future? I suppose the underwriters could be paid with a fixed cost and additionally interest on their loan, but the rate must be significant, otherwise there's no disincentive to take advantage, and they'd be at risk of being Lendys piggybank.
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nick
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Post by nick on Jun 15, 2017 9:46:22 GMT
I don't understand how the relationship with the underwriters works. With insurance I assume the underwriters are paid a fixed charge to cover the risk of needing their services, and they base the charge on the risk. The risk of not filling loans appears to have increased substantially, so does that mean Lendy will struggle to find/afford underwriters in the future? I suppose the underwriters could be paid with a fixed cost and additionally interest on their loan, but the rate must be significant, otherwise there's no disincentive to take advantage, and they'd be at risk of being Lendys piggybank. Yes, underwriters are expensive - their terms will be far stricter than ours (the term will be shorter than the actual loan term - and the longer the underwriter is unpaid, the higher the % will get), and the contract will be between the underwriter and platform, so platform is liable to pay the amount due, not the borrower It is reported that LY are going to post profits close to £6m for the previous financial year, so they a not sort of money. Also, 1.5% and then the margin of <at least> 0.5%/ month gives LY plenty of breathing room if they do have to use underwriters I guess they could also use their own capital, but I'm unsure how this will sit with the FCA There has been a lot of discussion about the FCA taking a dim view of platforms investing their own capital or restricting the extent to which they do so, but I do not believe this to be the case. My understanding is that there are no direct restriction on platforms investing their own capital. However, regulated firms must ensure they meet capital adequacy requirements. Investments into P2P will have a very high risk rating which means they will need to almost fully fund these investments from reserves to ensure that they can absorb losses making it very costly for them in capital terms. It is the increase in capital adequacy requirements that has led to most banks shying away from higher risk lending and why they are happy to lend into residential mortgages at very low rates (the capital they need to keep aside is much lower) versus higher risk development loans etc which although provide much higher returns (and arguably a lot high risk adjusted return), require much more capital and thus greatly reduce their ability to leverage.
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I might be wrong, but I see this as the way forward. There is no more easy exit strategy on Saving Stream. There are lots of hopes (e.g. next repayment, next interest run etc.), but in reality the queues get longer and longer. 
