Risk

on the rebuildingsociety.com blog

18th May, 2016

Did You Know: Average Return of All Lenders

Our Did You Know series highlights features, aspects and information about the platform that may have passed you by.

In line with our campaign for improved transparency and communication with lenders, we crunched the numbers on our loanbook to deliver you a picture of the average returns enjoyed by rebuildingsociety lenders.

The data we analysed covers the period between our inception up to the end of the 2015/16 tax year, and takes into account all interest received up to this point, losses relating to bad debt, and expected losses on any under-performing loans. The figures do not include promotional credits or any profit/loss from Microloan Trading.

As always, past returns are not necessarily a guarantee of future performance.

So here are the facts:

  • 15.5% AER: If you had placed the same amount on every loan in the said period, your net return would have been 15.5% AER, which compares very favourably with the reported 7.3% AER for one of our largest competitors.
  • Security Counts: The most notable impact on returns was the security offered. It will come as no surprise that loans with only a personal guarantee represent our lowest returns for lenders at just 8.88% AER – though still higher than the 7.3% AER reported by our largest competitor.
  • Size Matters: Our medium sized loans (£50,001 – £99,999) gave the best returns, narrowly ahead of large loans (£100,000+).  This is to be expected given that additional security is required above £50,000, so the medium and large loans are unhampered by the poorer performance of loans backed only by a PG.
  • Cream of the Crop: By quite a margin our highest rates of return were offered by loans that were medium sized and backed with property as security.

Want the numbers to sink your teeth into? Download an excel spreadsheet containing the data.


06th Nov, 2014

Explaining Our Underwriting Process

In order to get a true understanding of our underwriting process, lenders need to know the right checks take place prior to listing. In this blog, we explain what happens in the time between receiving a loan application and a loan being listed on the Marketplace.

We receive a number of applications from potential borrowers every week. Currently only about 50% of all applications received will make it to the marketplace.

When borrowers apply we ask them for the previous two years of statutory accounts and a set of complete and recent management accounts. We’ll also ask them to disclose any additional borrowings the business has and for the directors to provide a statement of their assets and liabilities.

Scrutinising Accounts (more…)


04th Apr, 2013

Triple-A confusion – what’s in a credit rating?

When the UK lost its triple A credit rating back in February, there were varying degrees of reaction from traders and economists, from gravely concerned to not bothered one iota, as most people recognised that things hadn’t improved substantially in the UK (or global) economy to merit the same level of optimism that was justifiable pre-crunch.

Subsequently, only two G7 countries in the world still have Triple-A ratings; Canada and Germany, and as recent data shows, their immediate prospects are far from wonderful.

(more…)


23rd Jan, 2013

What would funding do for your business?

The Funding for Lending scheme is reported to be fuelling a resurgence in the housing market, but there are doubts over its effectiveness in getting funds to businesses.

Many would say loosening controls over lending to individuals and businesses got us into this mess in the first place, but to rule out profitable businesses with dynamic leaders looking to grow, lenders are surely missing the opportunity to back a winner.

(more…)


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