Peer-to-peer lending sites: MSE guide discussion

Froggitt

cfw1994 wrote: »

Haven’t put more in recently....& our numbers are teeny tiny compared with other investments.
Kuflink *appear* to be very well run....but perhaps Lendy/Moneything and others did up to the end!
Still claim to have not lost a penny of investors money (no longer on their front page, but commented on TrustPilot to confirm that), and still have their own “skin in the game” of loans out.

Are you not? Do Kuflink concern you?

Landbay closed down their retail business because they couldn't meet investors interest expectations of around 3.5%.

Kuflink are offering upto 7% to investors.

Both are property based P2P.

How can Kuflink offer double the interest rates compared to a business that couldn't sustain their own rates?

firestone

Not sure what "Landbay couldn't meet investors interest expectations of 3.5%" means but they never missed a payment or had a default?.What would be true is that they were never able to make inroads into the general public(it seems most in p2p were chasing the 12% rate) so they closed their retail business because it did not want the hassle of admin etc for only 10% of the customers being retail against 90% of institutional money.
Kuflink offer more because i assume they are in a more higher risk part of the property market

AdrianC

firestone wrote: »

Not sure what "Landbay couldn't meet investors interest expectations of 3.5%" means

They couldn't source enough decent-quality loans willing to pay a rate that allowed them to pay investors 3.5% and make a profit, probably.

Froggitt

firestone wrote: »

Not sure what "Landbay couldn't meet investors interest expectations of 3.5%" means but they never missed a payment or had a default?.What would be true is that they were never able to make inroads into the general public(it seems most in p2p were chasing the 12% rate) so they closed their retail business because it did not want the hassle of admin etc for only 10% of the customers being retail against 90% of institutional money.
Kuflink offer more because i assume they are in a more higher risk part of the property market

https://blog.landbay.co.uk/blog/2019/11/28/dear-retail-investor

When we launched, our rates for borrowers were around 5.5% and now our average is less than 3.5%. As we have reduced our rates for borrowers in order to remain competitive, we have had to reduce rates for retail investors. We have also reduced our fees so that Landbay has effectively absorbed some of that rate cut each time, thus squeezing our margins beyond tolerance, which is not sustainable

firestone

Froggitt wrote: »

https://blog.landbay.co.uk/blog/2019/11/28/dear-retail-investor

Fair point as i thought you meant they were not paying out but in a way it comes back to my point about them only having 10% retail customers.The expectations of a lot of p2p investors is (or was) in looking at it as we only want 12% (i was happy at just over 4% with LB) whereas the institutional money looks at it as we want our money back first plus a few percent so different expectations.
At the end of the day it looks like successful platforms will just revert back to being the sort of private companies they were meant to be disrupting.

firestone

AdrianC wrote: »

They couldn't source enough decent-quality loans willing to pay a rate that allowed them to pay investors 3.5% and make a profit, probably.

get the point about paying investors but would guess if a bank has bought the retail loan book and they are working with the like of L&G the loans are a decent quality.But whether they can get enough market share in the current climate will be interesting but it does seem they think they can continue with large investors

msallen

AdrianC wrote: »

If I hadn't bothered to read even the most basic information before signing up, then I'd be fuming with myself.

Indeed, but a seasoned and experienced investor (Since the early 80's) would never do such a thing.

Froggitt

firestone wrote: »

Fair point as i thought you meant they were not paying out but in a way it comes back to my point about them only having 10% retail customers.The expectations of a lot of p2p investors is (or was) in looking at it as we only want 12% (i was happy at just over 4% with LB) whereas the institutional money looks at it as we want our money back first plus a few percent so different expectations.
At the end of the day it looks like successful platforms will just revert back to being the sort of private companies they were meant to be disrupting.

Those investors chasing 12% took on the equivalent risk, and have only themselves to blame if it went tits up. Bit like those people in mini-bonds paying 8%.

masonic

Froggitt wrote: »

Those investors chasing 12% took on the equivalent risk, and have only themselves to blame if it went tits up. Bit like those people in mini-bonds paying 8%.

So what is the maximum rate that could be considered sustainable in your opinion? There isn't much difference between the 8% offered in the LCF scam and the 6%+ offered by RateSetter for loans of the same vintage.

Personally I asses risk based on the loans being made, not the interest rate on offer to lenders.

AdrianC

Wet-finger figure in another place was always to expect ~7% after defaults, at best, no matter what the headline rate.