« RateSetter P2P returnsFunding Circle raise minimum lending rates »


Comment from: James [Visitor]
JamesAgree with your comments, re. the longer term picture. However, shorter term, there appears to be (judging by the FC Forum Comments) a not insignificant number of lenders now locked into loans they intended to sell-on, and are much less likely to be able to do so. They are, understandably, not happy. I'm an FC lender who is less unhappy, but I still don't appreciate such a radical change being rushed into place without any prior warning. It has profoundly altered the bidding process on C-based loans. Indeed, because loans are now being filled much faster at these minimum/floor rates, there is now almost no point in asking questions of the borrower because the auction will have been filled at the minimum rate by the time you've finished typing.

In my opinion, rushing these minimum limits into place is a massive balls-up on the part of FC, and they are going to lose some of their lender base as a result of it. People do not appreciate having their money locked into an asset they believed to be liquid. It's one thing when normal market forces cause a loss of liquidity. It's quite another when it is done by a centrally planned change.
25/06/13 @ 06:38
Comment from: Daniel [Visitor]
DanielThe complaints about "liquidity" seem to be misplaced. Funding Circle was never meant to be a market for speculators flipping loans. The secondary market was always intended for people needing to cash in their investments, for whatever reason, hence the limit of 3% discount/premium on sales. If this scares the speculators away then so much the better. The secondary market is looking a lot better for buyers now. I have been buying more than I have done for a long time. Of course, I am buying at rates that I am happy to hold for the duration of the loan, which is what I intend to do.

Some of the other complaints just seem to boil down to "I recently lent/bought a load of loans at stupid low interest rates and now I look stupid." Yeah, well. Who's fault is that?

Where there is some room for legitimate complaint is how this drastic change was swung on us without notice, although at least it was a mostly beneficial change (unlike Zopa's recent drastic changes which have killed Zopa for me and left me withdrawing my money as interest comes in because you simply can't get money out at any rate at all unless you sign up to "Safeguard").

I also worry a little that loans are now funded so quickly that there is no time to check out the borrowers or to ask them questions.

I also worry that the minimum rates are a bit too high for the B and C markets. Admittedly, they are only a little bit higher than I have my Autolend set to but then I was always happy to lend manually at lower rates than my Autolend rates on decent loans with good asset security on them. In fact, in the run up to this change I had pretty much been focussing exclusively on secured loans as the others did not seem to offer any sort of sensible risk adjusted return.

So, in my view, there is room for a few tweaks to the new system but I still see it as mostly positive.
29/06/13 @ 17:55