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Post by carpecyprinidae on Apr 26, 2017 11:34:25 GMT
Thanks, have actually been looking at that this morning! Already had a RS account so it was an easy temporary position to dump it in there while I considered
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archie
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Post by archie on Apr 26, 2017 11:52:03 GMT
I think I've tried my luck quite far enough. I've been using FC to save for a deposit on a house... I'm within a year of having enough now so moving everything to lower risk, lower-return savings. Most likely a split between savings accounts and the Rolling market on Ratesetter, although i have more research to do before committing to that. If you are eligible, a Lifetime ISA might be useful to you for your house purchase (save £4000, get £1000 from government after a year).
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Post by peerlessperil on Apr 27, 2017 9:36:13 GMT
I think I've tried my luck quite far enough. I've been using FC to save for a deposit on a house... I'm within a year of having enough now so moving everything to lower risk, lower-return savings. Most likely a split between savings accounts and the Rolling market on Ratesetter, although i have more research to do before committing to that. I'm not sure the rolling market on Ratesetter is nearly as "safe" as people seem to presume. What's going on there is maturity transformation - the simple old game of borrow short-term and lend long-term, which goes horribly wrong when the short-term folk decide they want their money back and decide not to keep rolling. You can't borrow from Ratesetter for 1 month...the minimum is a year. Try it. There is also plenty of analysis out there on the Ratesetter provision fund - it is worth looking very carefully at this and appreciating that the published provision fund value which is used to calculate the cover ratio actually includes future cashflows that will be derived from fees on loans in the very same loan book the defaults are occurring in, so there is an element of picking yourself up by your own bootstraps.... The Assetz 30 day is more sensible as investors know they won't have instant liquidity, but ultimately suffers from the same problem. If we get a significant platform failure or fraud in the p2p space then I suspect all secondary market liquidity everywhere will grind to a sudden halt as sellers overwhelm demand. At which point you may discover that what you thought was a <1month exposure suddenly has you locked in for up to five years (although blended average maturity will be shorter). I would personally keep a house deposit in FSCS covered bank accounts, and even then spread across multiple banks if above £85k.
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pip
Posts: 542
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Post by pip on Apr 27, 2017 9:58:16 GMT
I think I've tried my luck quite far enough. I've been using FC to save for a deposit on a house... I'm within a year of having enough now so moving everything to lower risk, lower-return savings. Most likely a split between savings accounts and the Rolling market on Ratesetter, although i have more research to do before committing to that. I'm not sure the rolling market on Ratesetter is nearly as "safe" as people seem to presume. What's going on there is maturity transformation - the simple old game of borrow short-term and lend long-term, which goes horribly wrong when the short-term folk decide they want their money back and decide not to keep rolling. You can't borrow from Ratesetter for 1 month...the minimum is a year. Try it. There is also plenty of analysis out there on the Ratesetter provision fund - it is worth looking very carefully at this and appreciating that the published provision fund value which is used to calculate the cover ratio actually includes future cashflows that will be derived from fees on loans in the very same loan book the defaults are occurring in, so there is an element of picking yourself up by your own bootstraps.... The Assetz 30 day is more sensible as investors know they won't have instant liquidity, but ultimately suffers from the same problem. If we get a significant platform failure or fraud in the p2p space then I suspect all secondary market liquidity everywhere will grind to a sudden halt as sellers overwhelm demand. At which point you may discover that what you thought was a <1month exposure suddenly has you locked in for up to five years (although blended average maturity will be shorter). I would personally keep a house deposit in FCSC covered bank accounts, and even then spread across multiple banks if above £85k. Couldn't agree more. People need to realise with this product that they can can get their money back only if there is sufficient liquidity to allow this. I think the product must make RS lots of money as they can finance long term loans at much lower rates than the 5 year rate and pocket the difference. For me this product gives you all the risk of the 5 year product, without the interest. For me I think the risk/reward no where near stacks up. However I have thought that with the 5 year rate too for the last two years and hence have been winding down my account. I spoke about concerns with the provision fund years back, making nice little graphs showing the bad debt as a % of repaid money steadily rising. I got very short shrift here and quite frankly made my own conclusion about my money and couldn't be bothered to convince others. Since then the PF has been changed around to include future income from loans. The goalposts have changed and I don't understand the current calculation so I can't invest. For me the provision fund coverage is now so low that there is no room for any cushion in a downturn. Remember in the past 5 years unemployment has remained low, interest rates low, house prices have not fallen etc...if all these were to change then I wouldn't want to be too exposed. But I have given up trying to convince others, all to their own.
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Post by jackpease on Apr 27, 2017 10:16:17 GMT
I spoke about concerns with the provision fund years back, ... I got very short shrift here Was that because 'seasoned' investors often suggest that a provision fund should be ignored as a distraction as it's false security? - if there is a crisis of confidence eg if there's a significant platform default as outlined above - everyone will hit the sell button and liquidity will collapse and overwhelm provision funds by whole orders of magnitude in which case we'll just have to hold to term and grit our teeth. Jack P
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pip
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Post by pip on Apr 27, 2017 10:57:46 GMT
I spoke about concerns with the provision fund years back, ... I got very short shrift here Was that because 'seasoned' investors often suggest that a provision fund should be ignored as a distraction as it's false security? - if there is a crisis of confidence eg if there's a significant platform default as outlined above - everyone will hit the sell button and liquidity will collapse and overwhelm provision funds by whole orders of magnitude in which case we'll just have to hold to term and grit our teeth. Jack P Jack I would word it slightly differently.
- A provision fund does give security to investors who are not fully diversified in one platform, to spread the risk that one or a few individual loan defaults could mean that they receive a rate less than the average for that platform. - A provision fund potentially gives a false sense of security in that it creates a cliff edge of losses. Up to the point that the provision fund does not pay out in full for defaults the investor does not even notice when there are defaults, they receive the full rate advertised. After the point that the provision fund runs out of money there is no protection at all. I think there is a risk that investors go from reading 'nobody has lost a penny' to the wrong conclusion that 'you can't lose a lot', when the provision fund is no protection from such an outcome. If defaults on a platform spike to 40%, the provision fund will barely help you at all. I guess it's like a ship sinking, the ship owners claiming 'there have been no leaks on the ship to date', doesn't mean 'there is no chance everybody will drown on this ship'. - I think the provision fund does have value, but investors need to stay on top of the coverage ratio. A poorly covered provision fund is pretty much useless. - The fee structure to fund provision funds are often opaque, the cynic in me would suspect that it's a source of revenue for the platforms. Remember you receive lower rates as a result of the protection of the fund, is this worth it, I would say in most cases no. - I worry that provision funds allow for manipulation. The calculations can be changed, the companies can loan it money and charge interest, recovery costs can be taken out of it, the legal ownership of such funds in the event of platform default needs to be considered. There is also the problem of how the provision fund money, that should belong to investors is invested. Is it invested in loans on the platform, is it loaned to the business, is it loaned to the owners, there is often little visibility. - I am not sure that there is actually a direct correlation between a liquidity collapse causing the provision fund to be overwhelmed. The provision fund should not be used to refinance debt, it should be used to pay out on defaults. If you buy a rolling product, with an underlying product of 5 years, and it can't be refinanced, then you are stuck with it for 5 years, the provision fund will only step in if it defaults. Of course in reality a liquidity collapse may often be caused by a collapse in confidence in the viability of the provision fund.
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am
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Post by am on Apr 28, 2017 17:12:30 GMT
Was that because 'seasoned' investors often suggest that a provision fund should be ignored as a distraction as it's false security? - if there is a crisis of confidence eg if there's a significant platform default as outlined above - everyone will hit the sell button and liquidity will collapse and overwhelm provision funds by whole orders of magnitude in which case we'll just have to hold to term and grit our teeth. Jack P Jack I would word it slightly differently.
- A provision fund does give security to investors who are not fully diversified in one platform, to spread the risk that one or a few individual loan defaults could mean that they receive a rate less than the average for that platform. - A provision fund potentially gives a false sense of security in that it creates a cliff edge of losses. Up to the point that the provision fund does not pay out in full for defaults the investor does not even notice when there are defaults, they receive the full rate advertised. After the point that the provision fund runs out of money there is no protection at all. I think there is a risk that investors go from reading 'nobody has lost a penny' to the wrong conclusion that 'you can't lose a lot', when the provision fund is no protection from such an outcome. If defaults on a platform spike to 40%, the provision fund will barely help you at all. I guess it's like a ship sinking, the ship owners claiming 'there have been no leaks on the ship to date', doesn't mean 'there is no chance everybody will drown on this ship'. - I think the provision fund does have value, but investors need to stay on top of the coverage ratio. A poorly covered provision fund is pretty much useless. - The fee structure to fund provision funds are often opaque, the cynic in me would suspect that it's a source of revenue for the platforms. Remember you receive lower rates as a result of the protection of the fund, is this worth it, I would say in most cases no. - I worry that provision funds allow for manipulation. The calculations can be changed, the companies can loan it money and charge interest, recovery costs can be taken out of it, the legal ownership of such funds in the event of platform default needs to be considered. There is also the problem of how the provision fund money, that should belong to investors is invested. Is it invested in loans on the platform, is it loaned to the business, is it loaned to the owners, there is often little visibility. - I am not sure that there is actually a direct correlation between a liquidity collapse causing the provision fund to be overwhelmed. The provision fund should not be used to refinance debt, it should be used to pay out on defaults. If you buy a rolling product, with an underlying product of 5 years, and it can't be refinanced, then you are stuck with it for 5 years, the provision fund will only step in if it defaults. Of course in reality a liquidity collapse may often be caused by a collapse in confidence in the viability of the provision fund.
IIRC, the RateSetter provision fund is used to cover not only defaulted loans but also delinquent loans (if a loan is late on an interest/capital payment - perhaps beyond a short grace period - it is bought out by the provision fund). So the provision fund owns loans with various degrees of dentedness.
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Post by WestonKevTMP on May 3, 2017 6:04:17 GMT
I spoke about concerns with the provision fund years back, ... I got very short shrift here Erm.... so here we are a few years later and lenders have continued to get every penny of capital and interest expected. And complete liquidity as promised? I know things aren't perfect (for example I'm no longer there  and the PF is split between cash and contracted), but it's been nearly 6 years now. In my opinion, that deserves some trust. But back to the point, it probably is not a good idea to put your house deposit into P2P, which should always be part of a wider investment strategy including cash, equities and any other alternatives that take your fancy (I like wind turbines, and "roller coaster rides" !) Kevin.
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r00lish67
Member of DD Central
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Post by r00lish67 on May 22, 2017 13:54:04 GMT
Prior to them ceasing entirely, it looks like they've lowered their rates again. 37340 is an A-rated loan, 67% LTV offered at 8.0%. I can't recall seeing anything but an A+ at 8.0% before, or am I wrong?
hmmm, nothing but Faint Crumbs of return left...
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c88dnf
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Post by c88dnf on May 22, 2017 16:32:32 GMT
Prior to them ceasing entirely, it looks like they've lowered their rates again. 37340 is an A-rated loan, 67% LTV offered at 8.0%. I can't recall seeing anything but an A+ at 8.0% before, or am I wrong? hmmm, nothing but Faint Crumbs of return left... Very faint indeed: that 8% is 7% after FC take their wedge. Given the record on late loans this year, I'm not interested in anything which is less than 10% from FC and then only after a great deal of heart-searching. Unsurprisingly, my investment in them is declining very steadily.
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r00lish67
Member of DD Central
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Post by r00lish67 on May 24, 2017 14:46:48 GMT
Well, if that one didn't float your boat, how about the newly launched 37526, an 11% C-rated property loan. It's a second tranche, the first was gobbled up as a whole loan.
If you are interested, it may be especially prudent to read the business profile. Some choice excerpts:
"Storm Desmond"
"Largescale flooding"
"behind schedule and budget"
"costly <new> drainage"
"78% LTV"
Well, what do you expect for such an astronomical < cough> return?
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andyp
Stubborn Yorkshireman from the rhubarb triangle
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Post by andyp on May 24, 2017 15:01:41 GMT
At least the property is on a nice hillside so it is only surface water flooding they are dealing with and not wide area inundation. One would hope this is much more feasible to remediate against?
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Post by yorkshireman on May 24, 2017 15:09:26 GMT
Well, if that one didn't float your boat, how about the newly launched 37526, an 11% C-rated property loan. It's a second tranche, the first was gobbled up as a whole loan. If you are interested, it may be especially prudent to read the business profile. Some choice excerpts: "Storm Desmond" "Largescale flooding" "behind schedule and budget" "costly <new> drainage" "78% LTV" Well, what do you expect for such an astronomical < cough> return? Lubbly jubbly, that floats my boat. Ideal for a quick flip by palming it off onto an unsuspecting autobidder sophisticated investor. 
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blender
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Post by blender on May 25, 2017 15:08:26 GMT
Not many of those in future. As long as the interest is pre-funded then it is a very slow flip, or perhaps an early repayment. AutoDustBin should take it - it takes any loan at par.
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adrian77
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Post by adrian77 on May 25, 2017 17:39:19 GMT
Another interesting one - looking at the photo it looks to me as if the foundations are at least 3 metres below the road surface to the rear...and they were surprised they had flooding problems! Can't see any evidence of a revetment to the rear - are they expensive to build answers on a postcard...however I have never built one after the main structure has been built and the thought of doing so sends me weak at the knees as I am not a civil engineer.
Another one to add to the suspected default list.
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and the PF is split between cash and contracted), but it's been nearly 6 years now. In my opinion, that deserves some trust.
