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Post by Ace on Sept 25, 2022 15:46:40 GMT
Live data, though, seems to show that investors aren't – yet– withdrawing. Both number of investors, and average investment, continuing a modest rise.
It will be very difficult to increase rates of any P2P black box account because the majority of the loans will be at lower rates for years.
Which is why I said some time ago that borrower and lender rates were going in the wrong direction, been obvious since the Russian invasion. P2P were pushing the envelope for as long as possible, can't really blame them, all those long term loans at 5% and the shorter term loans with inevitable extensions due to much more expensive refinancing next time.
Now it's going to be a bigger liquidity crisis. Lenders in P2P with no SM will also be stuck on low rates. Lenders in individual loans at low rates will have the best chance to turnover their capital, many started months ago.
Loanpad have been raising average borrower rates for some time now. I haven't done any quantitative analysis on this, but given that they were profitable before they raised rates, and given that they've substantially increased their loanbook since then, I would expect that Loanpad have scope to raise lender rates further and still remain profitable. I would expect that they will announce further small increases to lenders soon after the increases already announced for the 1st October come into play.
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Post by overthehill on Sept 25, 2022 15:49:57 GMT
Isn't the point though that once that does change then it's already too late? As we saw with AC sentiment can change in the blink of an eye. It's an interesting discussion and I can see the merits in both sides, though while I am undecided I have been reducing my holding in LP naturally over the last few months. Sorry if I am hammering this too much, but I don't like to see investors worrying unnecessarily. To repeat my previous post in more telegraphic terms, LP is IMMUNE from liquidity problems due to an investor withdrawal stampede. Watch the video referenced if you don't understand. The discussion about rates relative to FCSC-protected accounts is all valid, and a matter of personal psychology to be honest, but the AC liquidity precedent is a red herring. IMMUNE ? Absolute salesman's nonsense. And banks can't fail either, it's impossible.
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Post by jono75 on Sept 25, 2022 16:20:37 GMT
I think LP might have to rise rates more than the 0.1% this time, I think they were 5% once in the 60 day before I was an investor. Maybe that could be the sweet spot for now?
ISA cash rates are approaching 1% below loan pad, I got offered 3.25% from Nationwide on a maturity this week for one year. It will get to a point and may already be at a point where the FSCS protection is worth more than the difference to a number of investors.
I think an email will be coming our way soon.
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ilmoro
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Post by ilmoro on Sept 25, 2022 16:55:48 GMT
Clearly not. There's currently less than £1m in unallocated cash on the platform, so that couldn't service withdrawal requests for more than 1.3% of the total invested cash on the platform without resorting to their "extra liquidity providers". And we've no idea of how much extra liquidity is contracted to be provided. However, what we do know is: 1. At the start of covid there were significant volumes of withdraw requests, such that the amount of unassigned cash was reduced to zero, and all withdraw requests were honoured (next day for Classic and after 60 days for Premium). Unlike the fiasco at AC. 2. The majority of cash will be invested in the Premium Accounts, so the platform can stop new lending and use 60 days worth of repayments to further fund withdraw requests. There's over £9.3m due to be repaid over the next 60 days. Of course, some of these won't repay on time, but others will repay early. 3. Any new deposits could also be used to service withdrawal requests. I haven't seen a single week since the early covid withdrawal run where net deposits haven't been positive by at least £100k, and usually much more. 4. Less than £2.5m of the invested cash is due to repay in beyond a year's time (less than 3,5% of invested cash). 5. At the end of the day this is P2P, so we shouldn't be investing cash if we're not prepared to accept losses or delays. I think one of the reasons for AC's Covid "fiasco" was that their loan book has a large proportion of loans to hospitality industry which was closed down, whereas LP is solely property (at a slower pace, but building works and property sales were still going ahead). Covid and inflation are different scenarios. This time round investors will be withdrawing because the rates are no longer competitive. Not sure that's true. The principal issue, as AC has indicated, was the need to meet obligations for future funding on property developments (bit of a live issue elsewhere with multiple legal cases about such obligations, including for lenders). As has been seen elsewhere insecurity of funding has led to significant losses for lenders so maintaining this, at least until CBILS could potentially pick up the slack. Hospitality lending tends to be relatively small amounts so the demands of forbearance would have been less onerous (Not done any analysis). Security of funding isn't likely a major issue for LP as the partner provides the funds.
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agent69
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Post by agent69 on Sept 25, 2022 17:12:47 GMT
Isn't the point though that once that does change then it's already too late? As we saw with AC sentiment can change in the blink of an eye. It's an interesting discussion and I can see the merits in both sides, though while I am undecided I have been reducing my holding in LP naturally over the last few months. Sorry if I am hammering this too much, but I don't like to see investors worrying unnecessarily. To repeat my previous post in more telegraphic terms, LP is IMMUNE from liquidity problems due to an investor withdrawal stampede. Watch the video referenced if you don't understand. The discussion about rates relative to FCSC-protected accounts is all valid, and a matter of personal psychology to be honest, but the AC liquidity precedent is a red herring. Which bit of the video would that be:
- 2 seconds in - where it is stated that the video is not financial advice, or
- 18:10 in - when it is stated that there in no obligation for the lending partner to buy the loan back?
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Post by df on Sept 25, 2022 19:57:27 GMT
It will be very difficult to increase rates of any P2P black box account because the majority of the loans will be at lower rates for years.
Which is why I said some time ago that borrower and lender rates were going in the wrong direction, been obvious since the Russian invasion. P2P were pushing the envelope for as long as possible, can't really blame them, all those long term loans at 5% and the shorter term loans with inevitable extensions due to much more expensive refinancing next time.
Now it's going to be a bigger liquidity crisis. Lenders in P2P with no SM will also be stuck on low rates. Lenders in individual loans at low rates will have the best chance to turnover their capital, many started months ago.
Loanpad have been raising average borrower rates for some time now. I haven't done any quantitative analysis on this, but given that they were profitable before they raised rates, and given that they've substantially increased their loanbook since then, I would expect that Loanpad have scope to raise lender rates further and still remain profitable. I would expect that they will announce further small increases to lenders soon after the increases already announced for the 1st October come into play. I hope LP will be able to afford to continue increases to lenders in line with banks' trend. I like LP and don't really want to withdraw. Today the current 4.3% seems reasonable for what it is, but might be not next week. I'm expecting increase announcements from some banks shortly, had already received a few from Building Societies this week (most variable rate regular savers are going up in October).
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ashtondav
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Post by ashtondav on Sept 26, 2022 10:40:54 GMT
Back in 2005 when I started with ZOPA I was getting 7%+. And then the world went mad...
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littleoldlady
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Post by littleoldlady on Sept 29, 2022 6:57:21 GMT
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ashtondav
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Post by ashtondav on Sept 29, 2022 15:02:53 GMT
Rates might be slightly higher than that in a few months. Wouldn’t want to lock in for a year right now.
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littleoldlady
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Post by littleoldlady on Sept 30, 2022 8:00:10 GMT
Rates might be slightly higher than that in a few months. Wouldn’t want to lock in for a year right now. No nor would I. But in a few months LP might be bust or in withdrawal lockdown with no FSCS protection so I would prefer NC to LP. I am old enough to remember Northern Rock (ironic name!), Icelandic banks and more recently several p2p firms.
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mogish
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Post by mogish on Sept 30, 2022 8:09:54 GMT
Brings back memories... Icelandic bank... browns act if terrorism threat, kaupthing edge, days if 7% interest and the horrible feeling when neither platform existed at login😞
If rates got to 5% , I might even transfer my sticks isa back to cash.
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mrk
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Post by mrk on Sept 30, 2022 15:24:56 GMT
That didn't last long: Product no longer available
Only fixed rate bond available now is 3.25% for 5 years.
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Post by overthehill on Sept 30, 2022 16:37:59 GMT
That didn't last long: Product no longer available
Only fixed rate bond available now is 3.25% for 5 years.
There is a usual suspect list that do this all the time, I don't even bother adding them to the summary list I update, sometimes they only last a day. Time wasters.
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ashtondav
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Post by ashtondav on Sept 30, 2022 17:02:06 GMT
Rates might be slightly higher than that in a few months. Wouldn’t want to lock in for a year right now. No nor would I. But in a few months LP might be bust or in withdrawal lockdown with no FSCS protection so I would prefer NC to LP. I am old enough to remember Northern Rock (ironic name!), Icelandic banks and more recently several p2p firms. Not one of the top four p2p boys went belly up. Yes some changed business model and some restricted access. But then a 1 to 3 year bs account is pretty restricted. Each recession is different. 2008 was mortgage madness. This one is inflation. Buying bonds then bought you diamonds. Buying bonds this year has got you crucified. Even gold has you eating dog food. YTD p2p returns smack equities and bonds, especially if you were in US assets unhedged. Only beaten by my old holding of NSI index linkers (no longer available).
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Post by overthehill on Sept 30, 2022 17:34:32 GMT
No nor would I. But in a few months LP might be bust or in withdrawal lockdown with no FSCS protection so I would prefer NC to LP. I am old enough to remember Northern Rock (ironic name!), Icelandic banks and more recently several p2p firms. Not one of the top four p2p boys went belly up. Yes some changed business model and some restricted access. But then a 1 to 3 year bs account is pretty restricted. Each recession is different. 2008 was mortgage madness. This one is inflation. Buying bonds then bought you diamonds. Buying bonds this year has got you crucified. Even gold has you eating dog food. YTD p2p returns smack equities and bonds, especially if you were in US assets unhedged. Only beaten by my old holding of NSI index linkers (no longer available).
How many P2P companies have left lenders out of pocket due to external factors or unforeseen events or honest, legal and regulatory behaviour ? That is the measure of P2P , not criminal corporate behaviour you can find in any company sometimes causing its downfall.
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