Peer-to-peer lending sites: MSE guide discussion

takesyourchances

choochootrain wrote: »

Only bling loans for me these days.

Were you using for bling? I started to put some money in unbolted for bling after the dry up of new bling loans on Collateral and Moneything, I am getting my fill of large property so wanted something different to add.

Jordan_Stodart

economic wrote: »

You would say this as you work within the P2P lending industry. So you are biased and your comments should thus be taken as such.

P2P has not been around for a long time in fact it has not been through a recession with the exception of Zopa as you said. However Zopa was much smaller back int he last recession and underwriting standards higher then they are now. After the recession Zopa experienced competition - and the main way to fight competition is to relax underwriting standards. That is why i think you have to be careful now given we are 9 years away from the last recession. No idea when the next recession will be, but we are certainly closer to one and given the illiquid nature, i highly recommend derisking from P2P.

Sure it may not suffer from volatile swings, but at least with stocks if you are diversified they will recover over time. With P2P, a default is a default and all you will get back is recovery - only if the loan was secured in the first place. THE LOSS IS CRYSTALLIZED!!! And the loans will tend to default at the same time.

I take your point, but I still don't think the characteristics of P2P mean you need to run-down your entire P2P portfolio as a recession may/may not be on the horizon. As you rightly say, with stocks if you are diversified they will recover..well, I'd suggest building a diversified P2P portfolio with multiple platforms.

A recession will likely see several platforms fall away, not heathy enough to withstand a stressed environment. This is not a bad thing for the asset class. But does mean portfolios will get hit, so having exposure to mitigate platform risk is a smart move.

economic

Jordan_Stodart wrote: »

I take your point, but I still don't think the characteristics of P2P mean you need to run-down your entire P2P portfolio as a recession may/may not be on the horizon. As you rightly say, with stocks if you are diversified they will recover..well, I'd suggest building a diversified P2P portfolio with multiple platforms.

A recession will likely see several platforms fall away, not heathy enough to withstand a stressed environment. This is not a bad thing for the asset class. But does mean portfolios will get hit, so having exposure to mitigate platform risk is a smart move.

What i meant was that the P2P portfolio should be run down to a level that you don't mind taking the risk of large number of defaults given recession. For me this means ONLY choosing platforms secured against assets with low LTVs and good record of underwriting standards.

Personally i feel its just too much work to research into vs the income gained from P2P. Which is why i am personally derisking from them all.

To mitigate platform risk by having money spread around platforms (just the reputable ones) makes sense to me and is what i have done. But as you say in a recession it is likely platforms will fail. So not only are there significantly higher risks in permanent loss given defaults, you also have the potential of platforms failing and thereby not having access to your money (probably not earning any interest either whilst the platform is taking over by someone else) and all at the same time as worrying about what will happen to your money and keeping up to date with it all, just a waste of time!

Just not worth it IMO so better to just derisk completely before the next recession hits hopefully. It has been a fun and financially rewarding ride though!

choochootrain

takesyourchances wrote: »

Were you using for bling? I started to put some money in unbolted for bling after the dry up of new bling loans on Collateral and Moneything, I am getting my fill of large property so wanted something different to add.

Unbolted. Been building up a balance there since last August when Collateral started to focus on property. It's a slow process, though.

msallen

choochootrain wrote: »

Unbolted. Been building up a balance there since last August when Collateral started to focus on property. It's a slow process, though.

If you've been on unbolted since August you will probably be somewhere near your limit now then (at current loan size limits) as the oldest loans start to repay/default/renew after 6 months.

choochootrain

msallen wrote: »

If you've been on unbolted since August you will probably be somewhere near your limit now then (at current loan size limits) as the oldest loans start to repay/default/renew after 6 months.

Yep, reached my target balance a few weeks ago and not planning on depositing any more.

takesyourchances

choochootrain wrote: »

Unbolted. Been building up a balance there since last August when Collateral started to focus on property. It's a slow process, though.

Thanks for reply I've went the same route then but only started. I've feed a few hundred in so takes time to get it lent out. I'll just feed in and let it do it's thing. If you don't mind me asking how much have you invested in unbloted?

Thanks

choochootrain

takesyourchances wrote: »

Thanks for reply I've went the same route then but only started. I've feed a few hundred in so takes time to get it lent out. I'll just feed in and let it do it's thing. If you don't mind me asking how much have you invested in unbloted?

Thanks

£2k with an auto-lend maximum of £20 for provision trust, gold trust and bespoke loans. Spread across almost 300 loans with a mean interest rate of 0.78%. Have put more than £20 in the non-auto loans that pop up occasionally.

buyhighselllow

economic wrote: »

Out of interest which ones are you keeping and why?

Will stick with my bling provider as its relatively small and I see it as low risk ( and hard to get money into increasingly) I think out of the main ones I hold I will initially switch all AC to the QAA. RS I'm less twitched by but running what is left in the 5yrs into the rolling and then maybe out. FC I need to think about how I move based on the holding size I have. As you say its untested and I want to be a good buying position if a recession hits.

economic

buyhighselllow wrote: »

Will stick with my bling provider as its relatively small and I see it as low risk ( and hard to get money into increasingly) I think out of the main ones I hold I will initially switch all AC to the QAA. RS I'm less twitched by but running what is left in the 5yrs into the rolling and then maybe out. FC I need to think about how I move based on the holding size I have. As you say its untested and I want to be a good buying position if a recession hits.

Agree. Its prudent to start now given the illiquidity and time it takes to maturity. Some may very well pay before maturity which would be nice to see.

Im hoping i derisk completely within the next 3 years which should be possible. Its crazy to think i was once so bullish and was not mindful at all about the illiquidity and being untested during a recession. Just piling in without much consideration of that. But i have learnt my lesson and being proactive about it and starting early.