davos
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Post by davos on Aug 21, 2017 13:04:03 GMT
Funding Circle are switching of the secondary market so those who paid a premium for loans will almost certainly lose money because they can't sell at a premium if they sell after Sept 18th -can i claim from FC for this loss?
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r00lish67
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Post by r00lish67 on Aug 21, 2017 13:28:57 GMT
Funding Circle are switching of the secondary market so those who paid a premium for loans will almost certainly lose money because they can't sell at a premium if they sell after Sept 18th -can i claim from FC for this loss? Hi davos , welcome to the forum. I'm not sure I follow your logic with this one. Investors who purchased loan parts a premium will still be able to retain these loan parts and earn their stated return, all else being equal (defaults and early repayment could affect that, same as today). Although it might hamper someone who had the idea in mind of selling on their loan parts at a later date at a premium, I'm not sure why you think you'd "almost certainly lose money"? Edit: the thought occurs that you might mean you have a portfolio of loans bought at par and some at premium, that you won't then be able to disentangle. If that's the case, then it's true that after September 18th, you'll have to accept par for everything. Once the dust has settled today though, I don't see why parts shouldn't still be selling at a premium for the next few weeks.
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Post by GSV3MIaC on Aug 21, 2017 14:25:28 GMT
Yes, if you want to sell at a premium, do so soon (before 18th Sept). If you want to hold, no problem. If you want to pick later - tough. If you look elsewhere you'll see that the ability to sell AT ALL is a bonus, not a right.
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adrian77
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Post by adrian77 on Aug 21, 2017 16:45:54 GMT
Ref
Funding Circle are switching off the secondary market
I said this would happen (about 6 months ago?) and warned it could be problematic for flippers....this can't be good news for those who have bought rubbish to flip at above par -in fact such loans may not be saleable and a high percentage will fold - nasty! Don't say you weren't warned! Good luck with any class action - I am not saying FC have played us for fools but I think they have a case to answer...
I have been contacted by the financial press (again) - I suggested that their (proper) experts evaluate the whole p2p industry as it looks to me that Lord Turner's concerns were highly perceptive.
I also said a lot of these property loans were looking very problematical to me but I was not exactly the only one.
Am I glad I withdrew my money and bought a house in France - answers on a virtual postcard !
Goodnight FC!
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Stonk
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Post by Stonk on Aug 21, 2017 17:53:56 GMT
I said this would happen (about 6 months ago?) and warned it could be problematic for flippers....this can't be good news for those who have bought rubbish to flip at above par -in fact such loans may not be saleable and a high percentage will fold - nasty! Don't say you weren't warned! For various reasons, I held loan parts which I did not intend to hold to completion. I did not have any problem off-loading them today - all shapes and sizes sold as fast as ever. I don't think the flippers need worry, good old AutoBid will suck up the dross well before 18 September.
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Post by GSV3MIaC on Aug 21, 2017 18:50:53 GMT
That'll work for sales at par or a discount .. the complaint was (aiui) sales at a premium are not going to be possible in future (right now they are only possible to manual buyers, and there won't be any after 18/Sept).
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ceejay
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Post by ceejay on Aug 21, 2017 22:26:51 GMT
I think the change has effectively started already... Today, beginning the process of restructuring my portfolio for the new rules, I put a lot of parts on the SM.
I followed my usual principles for setting the premium - taking account of the market, looking for a decent price without being overoptimistic.
What happened today, as far as I can see, is that not a single part shifted where the premium was over 0.5%, which does not fit at all with my prior experience.
It makes sense, of course - why buy at a premium when you won't be able to sell at one?
But it means that OP has, in his terms, already "lost" money because he won't be able to sell at the premium he bought at.
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wysiati
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Post by wysiati on Aug 21, 2017 23:09:30 GMT
I think the change has effectively started already... Today, beginning the process of restructuring my portfolio for the new rules, I put a lot of parts on the SM. I followed my usual principles for setting the premium - taking account of the market, looking for a decent price without being overoptimistic. What happened today, as far as I can see, is that not a single part shifted where the premium was over 0.5%, which does not fit at all with my prior experience. It makes sense, of course - why buy at a premium when you won't be able to sell at one? But it means that OP has, in his terms, already "lost" money because he won't be able to sell at the premium he bought at. It really does depend upon what you are offering, surely? FWIW, although things may change I managed to sell plenty of 'tester' loan parts at +3% premium today, mainly A+, A, B, E bands. With the new incoming A+ rates scheduled to be 5.9%pa (60 month term) or less, for example, a loan part in the same risk band purchased at a 3% premium but still offering a 9.5-11.5% buyer rate, will represent real value to some buyers. It might make more sense for the presumed lower risk bands as there should arguably be greater confidence in the ability to buy and hold. There is no guarantee of being able to sell loan parts at all, never mind at a premium. If you buy at a premium you implicitly accept the resulting % buyer rate offered at the point of sale and should assess primarily on that basis; any reliance on being able to re-sell at an equal or greater premium is a speculation. Previous changes arguably disadvantaged lenders to a greater degree, e.g. when material increases in loan rates / the move to higher fixed rates rendered a large bulk of historic loans owned at the average rate or less relatively unattractive (although perhaps not unsellable, and as they matured and you could potentially 'roll down the yield curve'), at least in terms of headline returns.
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