The Instant Returns feature has been introduced by Ablrate to solve the issue, on some loans, where a bid may be made by a lender, but that lender does not receive returns until the loan draws down.

How the Instant Returns feature solves this is by rewarding early bidders with returns from the day they make a bid. So if the auction runs for one month and the prevailing rate of the loan is 12% you would, if you bid on the first day, get 1% credited to your account on drawn down. If you bid half way through the month you would get 0.5% etc. We think this is a fairer way of rewarding bidders and encourages loans to close early.

Of course it also gives us the incentive to make sure loans draw down on time!

Which Loans Qualify?

Not all loans will have the Instant Returns enabled. Fixed rate loans that we know are going to draw down are more likely to have the feature enabled. This may be loans that are underwritten or are equity release where a partial draw down is possible without affecting the integrity of the transaction.

Of course in a 'Dutch auction' where bidders are bidding against each other, the facility would not work in practice, so these loans will not have the facility enabled. You will be able to see which loans are carrying this feature as it will be clearly stated on a loan.

This feature was introduced after feedback from investors, so if you have any comments to add, or believe there can be improvements to this feature, or any others, then do let us know, your feedback is invaluable.