puddleduck
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Post by puddleduck on May 2, 2018 8:03:30 GMT
I've never used auto re-invest settings as when I was in rolling, I always used to look at the queue, and the rates offered and could almost always work out a rate a few points higher to get a match at the 12:30pm run.
I've not used rolling at all since rates went south, so this won't effect me, but this seems terrible for anyone who did, and will have an effect of automatically depressing rates.
When businesses claim to be acting in our interests and 'simplifying' things, you can almost guarantee it's going to be bad news. Never has 'vote with your feet' seems so applicable.
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ceejay
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Post by ceejay on May 2, 2018 8:33:06 GMT
Several comments here about "jumping ship" and "voting with ones feet" ... and I'm certainly contemplating the same. However, which platforms offer a close match to the RS Rolling market?
OK, AC's 30DAA comes straight to mind, but I already have more than I am entirely comfortable with on AC (not that I don't like them, on the contrary, but platform risk is platform risk).
So where else has similar/better rates and ease of exit "in normal conditions"?
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jsmill
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Post by jsmill on May 2, 2018 8:43:04 GMT
The way this has being announced and portrayed by Ratesetter is completely unacceptable. This isn't a tweak, it is essentially a new product. No issue with Ratesetter doing this if they believe it is commercially in their interests but they should be open about it. As Stonk observed this is now essentially a variant on the 5 year income market. I would term it the "up to 5 year income market". It also produces entirely arbitrary results given that the underlying loans range from 3 months to 5 years.
I have found the Ratesetter rolling market a useful alternative for a portion of my assets that would otherwise be in cash, accepting the increase in risk for slightly (albeit increasingly unattractive) improved rates. As with others on here I will wind down my positions rather than continue with this. Cash will be the fall back option but interested to hear how others on here intend to reallocate?
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mary
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Post by mary on May 2, 2018 8:52:35 GMT
Several comments here about "jumping ship" and "voting with ones feet" ... and I'm certainly contemplating the same. However, which platforms offer a close match to the RS Rolling market? OK, AC's 30DAA comes straight to mind, but I already have more than I am entirely comfortable with on AC (not that I don't like them, on the contrary, but platform risk is platform risk). So where else has similar/better rates and ease of exit "in normal conditions"? This new way of operating is a copy of Growth Street (except Growth Street don't have the stupid 14 day withdrawal penalty). Growth Street offers revolving 30 day loans at 5.3% fixed, and with a PF! You do get some cash drag on reinvestment, but returns are way better than RS Rolling. It's a much smaller platform with less history and with option of £200 bonus if you invest £5k.
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jlend
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Post by jlend on May 2, 2018 9:17:44 GMT
With 93 percent of lenders using the market rate i am guessing they are not too bothered about some people leaving the market. Especially with a fair chunk of lender money sitting unlent on the rolling market as a backup. A fair number of tbe 7% will just accept the change.
I think this change is more for the benefit of RS in limiting volatility and locking in a rate against each borrower loan on the rolling market to manage cost risk.
I think the rest of the words feel more like window dressing and extra rules.
I cant see any valid reason for lenders not to have the choice of setting the reinvestment rate for a new loan funded via any regular capital and interest payments from an existing borrower. This isnt gaming the system by withdrawing money and putting it back on the market at a higher rate. It is simply investing money that a borrower has chosen to repay, this feels like a new investment to me and something i can do on the 1 and 5 year markets.
It would be good if they put energy into getting the PF coverage ratio towards the upper end of the target range of 150% given we might be in for a difficult few years.
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ahowlin
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Post by ahowlin on May 2, 2018 11:31:31 GMT
As I can only see the rates I achieve in the rolling market heading south after this change, I am directing the funds to the 5-year market where you will still be able to set a rate.
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mullet
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Post by mullet on May 2, 2018 11:38:32 GMT
I like this comment:
Currently, investments in the Rolling market ‘roll’ each month. When this happens all your investments are reinvested and matched to different borrowers. This means that the interest rate of your investment is likely to change every month. Many of our customers have said they find this complicated
Go on, own up - who complained it was too complicated! A company called Ratesetter having a product where the rate is set each month - whatever next!
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Post by befuddled on May 2, 2018 11:56:23 GMT
As I can only see the rates I achieve in the rolling market heading south after this change, I am directing the funds to the 5-year market where you will still be able to set a rate. If you get a reasonable rate on 5 year (5%+), even with the 1.5% early exit hit, you should still beat typical rolling rate - assuming RS can sell the 5 year loans - or have I missed something... (I've never sold 5 year loans early so don't know if this is as easy as RS claim)
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ceejay
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Post by ceejay on May 2, 2018 12:11:15 GMT
As I can only see the rates I achieve in the rolling market heading south after this change, I am directing the funds to the 5-year market where you will still be able to set a rate. If you get a reasonable rate on 5 year (5%+), even with the 1.5% early exit hit, you should still beat typical rolling rate - assuming RS can sell the 5 year loans - or have I missed something... (I've never sold 5 year loans early so don't know if this is as easy as RS claim) Depends how long you hold the loan for. If you only hold the loan for two months, even at 6% pa that means you will have earned only 1% interest, so a 1.5% fee would put you in the red.
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ceejay
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Post by ceejay on May 2, 2018 12:13:51 GMT
I like this comment: Currently, investments in the Rolling market ‘roll’ each month. When this happens all your investments are reinvested and matched to different borrowers. This means that the interest rate of your investment is likely to change every month. Many of our customers have said they find this complicatedGo on, own up - who complained it was too complicated! A company called Ratesetter having a product where the rate is set each month - whatever next! It's a bit like the dumbing down of FC that happened last year - possibly an inevitable consequence of growth into the mainstream. If 93 % of their lenders really were using "market rate" (which anyone regularly using this forum would know was rarely a sensible choice) then, yes, it probably was too complicated for them.
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spiral
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Post by spiral on May 2, 2018 12:36:53 GMT
If understanding the product is too complicated they've got no chance of understanding the risks!
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jlend
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Post by jlend on May 2, 2018 13:27:21 GMT
I like this comment: Currently, investments in the Rolling market ‘roll’ each month. When this happens all your investments are reinvested and matched to different borrowers. This means that the interest rate of your investment is likely to change every month. Many of our customers have said they find this complicatedGo on, own up - who complained it was too complicated! A company called Ratesetter having a product where the rate is set each month - whatever next! The rate of their investment will still change every month even with the new model.... as the normal monthly capital re-payments and interest payments from borrowers will be re-invested at the market rate for that day.... Some people will still be confused....
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Stonk
Stonking
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Post by Stonk on May 2, 2018 13:37:12 GMT
If you get a reasonable rate on 5 year (5%+), even with the 1.5% early exit hit, you should still beat typical rolling rate - assuming RS can sell the 5 year loans - or have I missed something... (I've never sold 5 year loans early so don't know if this is as easy as RS claim) I suspect this is a common misunderstanding. The 1.5% fee does not mean a 1.5% reduction in the interest rate. It is 1.5% of the cash released. At one particular point in the life of a loan (just before a year old), it will be the same as a 1.5% reduction in interest rate. Before that point, it will be worse; afterwards, it will be better.
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ceejay
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Post by ceejay on May 2, 2018 14:10:31 GMT
I like this comment: Currently, investments in the Rolling market ‘roll’ each month. When this happens all your investments are reinvested and matched to different borrowers. This means that the interest rate of your investment is likely to change every month. Many of our customers have said they find this complicatedGo on, own up - who complained it was too complicated! A company called Ratesetter having a product where the rate is set each month - whatever next! The rate of their investment will still change every month even with the new model.... as the normal monthly capital re-payments and interest payments from borrowers will be re-invested at the market rate for that day.... Some people will still be confused.... No, that's not correct - the point of the new RS system is that once you have a lump in the rolling market at a given rate, it will stay at that rate until either you pull out or that loan comes to an end, at which point the reinvestment rules apply. The length of the loan will be random, up to 5 years.
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jlend
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Post by jlend on May 2, 2018 15:18:08 GMT
The rate of their investment will still change every month even with the new model.... as the normal monthly capital re-payments and interest payments from borrowers will be re-invested at the market rate for that day.... Some people will still be confused.... No, that's not correct - the point of the new RS system is that once you have a lump in the rolling market at a given rate, it will stay at that rate until either you pull out or that loan comes to an end, at which point the reinvestment rules apply. The length of the loan will be random, up to 5 years. But every month there will be a bit of a repayment from the borrower - the RS loans are not bullet loans, they pay back interest and and a portion of the capital every month. Every month on the 5 year market you get a bit of capital back plus a bit of interest. They are doing the same on the rolling market. "As capital and interest is repaid by borrowers, it is returned to investors in monthly instalments for the duration of the investment. These repayments will be automatically reinvested back into the Rolling market at the prevailing Market Rate. As the overwhelming majority (up to 93%) of our investors currently reinvest at the Market Rate, a proportion that continues to rise over time, we have decided to withdraw the option of selecting a bespoke rate for reinvested money in the Rolling market." It is also worth remembering that many loans are paid back early by borrowers either in part or full. These repayments will go back onto the market at the market rate that day I assume.
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