jlend
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Post by jlend on Jun 29, 2018 8:07:46 GMT
There is a gap that has been building up between the Market Rate and the next big lump of money on the market
3.5% £646.2k
3.4% £59.1k
3.3% £1.7k
3.2% £5.7k
3.1% £5.9k
3.0% £18.7k
2.9% £475,220.03 Market Rate
This has gradually been getting bigger since the change.
It will be interesting to see how big the gap gets over the next month.
I haven't seen this much of a gap before from what I can remember.
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jlend
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Post by jlend on Jun 29, 2018 8:11:26 GMT
Are we entering an interesting phase of this new Rolling experiment by RS. Summary of my market observations so far Date, £ in Rolling, market rate. 6th jun 8.7m mr ?? 7th Jun 9.8m mr 3.0% 9th jun 7.9m mr 2.5% 12 th jun 7.7m mr 2.5% 13th Jun 7.2m mr 2.4% 14th June 5.9m mr 2.4% 20th June 4.3m mr 2.4% 24th June 3.6m mr 2.7% 27th June 4.4m mr 2.5% 28th June 2.4m mr 2.7% Amount on market usually taken late afternoon. So on the offchance of getting the odd match I was just putting everything repaid at 3.0%, 3.1% and 3.2% on Rolling until I had a round £1000 to withdraw and would you believe it, it all got taken today with matching at 3.3% when I looked. So while my data is not complete it shows a spectacular departure of funds from Rolling since the changes and the net result after 3 weeks or so is the best matching rate I have manage in a fair while The 7% who still like the idea of being their own rate setters are speaking RS, maybe 4% on Rolling round the corner if this goes on for much longer. I thought it would be 2/3 months before the changes made a significant difference, but already RS seem to have sqeezed almost everything out of cheap Rolling money, and with only just over £3M available on 1 & 5 year combined, and all the surplus IFISA funding evaporated, a spike could be imminent! I guess some of the "barred" Rolling money could be tempted back into revived-rate term markets, so maybe it will be a case of "all change, everything stays the same!". Perhaps in the mean time there will be an opportunity for some attractive contracts.
The fall in the amount of lender money on the market may in part be due to RS lending more money to borrowers. I haven't been keeping an eye on the amount of money on loan overall.
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dandy
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Post by dandy on Jun 29, 2018 8:50:58 GMT
The reduction in RM is simply a reflection of the fact that RM money is no longer repaid/relent every 30 days. So this does not reflect any reduction in funds/liquidity/popularity at RS.
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happy
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Post by happy on Jun 29, 2018 9:31:46 GMT
The reduction in RM is simply a reflection of the fact that RM money is no longer repaid/relent every 30 days. So this does not reflect any reduction in funds/liquidity/popularity at RS. I don't think that can be correct as we see a pretty much steady reduction in lender cash after the point at which the new rules started. If it was a result of the new rules alone then the hit would happen immediately the new rules came into effect not progressively as we are seeing. Based on the fact that we had a poster here admitting to removing £400,000 from the market as a result of the changes, it seems many people who set their rate before are not happy at having reinvestment at a rate they cannot control and this is having a direct impact on the amount of cash available to RS. There is hardly any money now below 3.5% and we have not seen this situation for a long time.
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Post by befuddled on Jun 29, 2018 10:51:23 GMT
Do we know at what point RS will not be able to immediately release 30 day loans and so force the lenders to wait until the underlying loan matures which could be up to 5 years.
I guess they have a liquidity fund for this purpose - is anything known about size, how it get replenished etc
Setting up loans at 2.7, most people unhappy below 3, above 3 available easily elsewhere - and ability to immediately sell out penalty free - all the ingredients for a recipe of disaster !
- or have I misunderstood something ?
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jlend
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Post by jlend on Jun 29, 2018 11:16:07 GMT
Do we know at what point RS will not be able to immediately release 30 day loans and so force the lenders to wait until the underlying loan matures which could be up to 5 years. I guess they have a liquidity fund for this purpose - is anything known about size, how it get replenished etc Setting up loans at 2.7, most people unhappy below 3, above 3 available easily elsewhere - and ability to immediately sell out penalty free - all the ingredients for a recipe of disaster ! - or have I misunderstood something ? We don't know how much of their own money they have available for liquidity. Just this statement Does RateSetter ever lend through its own Market?
Yes, from time to time RateSetter lends directly into its market in secondary loans to facilitate access to lenders. This is always limited and in no way means that access is any more guaranteed.They have also said in the past that they have "friendly" lenders who provide liquidity from time to time. I assume this is still the case. I am guessing this may include some of their equity lenders for example or some big hitters. They have never had a problem since they started in 2010 on the rolling market, even with the problem loans last year. Although past performance is no guarantee. If the press are to be believed, they are going back to the market to raise an additional 30m funding from equity investors. This may give them extra liquidity if needed.
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dandy
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Post by dandy on Jun 29, 2018 11:25:54 GMT
The reduction in RM is simply a reflection of the fact that RM money is no longer repaid/relent every 30 days. So this does not reflect any reduction in funds/liquidity/popularity at RS. I don't think that can be correct as we see a pretty much steady reduction in lender cash after the point at which the new rules started. If it was a result of the new rules alone then the hit would happen immediately the new rules came into effect not progressively as we are seeing. Based on the fact that we had a poster here admitting to removing £400,000 from the market as a result of the changes, it seems many people who set their rate before are not happy at having reinvestment at a rate they cannot control and this is having a direct impact on the amount of cash available to RS. There is hardly any money now below 3.5% and we have not seen this situation for a long time. Why immediately? It should happen over the course of a month so I think in ~ 10 days the system will have worked through the overlap and appear more stable The £10m in RM was never a true reflection of "cash" sitting there - this was simply loans being artificially repaid and re-loaned. When my 30 day period ended for eg £1,000, my loan " shown as money" shows on the list to be re-matched. That's all. Mr £400k is a drop in the ocean. 10k isa investors put in £100m at last count. Probably a lot more since.
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jlend
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Post by jlend on Jun 29, 2018 11:39:07 GMT
I don't think that can be correct as we see a pretty much steady reduction in lender cash after the point at which the new rules started. If it was a result of the new rules alone then the hit would happen immediately the new rules came into effect not progressively as we are seeing. Based on the fact that we had a poster here admitting to removing £400,000 from the market as a result of the changes, it seems many people who set their rate before are not happy at having reinvestment at a rate they cannot control and this is having a direct impact on the amount of cash available to RS. There is hardly any money now below 3.5% and we have not seen this situation for a long time. Why immediately? It should happen over the course of a month so I think in ~ 10 days the system will have worked through the overlap and appear more stable The £10m in RM was never a true reflection of "cash" sitting there - this was simply loans being artificially repaid and re-loaned. When my 30 day period ended for eg £1,000, my loan " shown as money" shows on the list to be re-matched. That's all. Mr £400k is a drop in the ocean. 10k isa investors put in £100m at last count. Probably a lot more since. Am not sure that is correct but I think it is impossible to know exactly what is happening - I am guessing it is due to a number of factors. The money repaid and re-loaned to existing loans all happened during the day as a rule - usually matched by mid afternoon, and much of it before that for the 93% of MR lenders. So I think the 10m was a reasonable reflection every evening on the market. The intra day total on the market will have been skewed at times as you say. There was still a large amount on the rolling market late afternoon/evening running up to midnight after this process had completed each day. The ISA lender money will have been lent out by now so I don't think that is having much effect now. I expect ISA money will have slowed down a lot given the peak for the wider ISA markets tend to be at the start and end of the financial year for both new investments and transfers
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dandy
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Post by dandy on Jun 29, 2018 12:10:25 GMT
Am not sure that is correct but I think it is impossible to know exactly what is happening - I am guessing it is due to a number of factors. The money repaid and re-loaned to existing loans all happened during the day as a rule - usually matched by mid afternoon, and much of it before that for the 93% of MR lenders. So I think the 10m was a reasonable reflection every evening on the market. The intra day total on the market will have been skewed at times as you say. There was still a large amount on the rolling market late afternoon/evening running up to midnight after this process had completed each day. The ISA lender money will have been lent out by now so I don't think that is having much effect now. I expect ISA money will have slowed down a lot given the peak for the wider ISA markets tend to be at the start and end of the financial year for both new investments and transfers We can certainly agree on the part in bold. One thing which is "probably" certain though is that any rise in rates will generally only occur where there is a corresponding reduction in liquidity ...
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TheDriver
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Post by TheDriver on Jun 29, 2018 22:23:46 GMT
Well it looks as if the MR for Rolling will go over 3% tomorrow for the first time since the beginning of April! (and if not there should be serious questions over it's origin)
RS's problem now is that if rates spike those are tied in for the whole term, not just for the next month as previously.
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voss
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Post by voss on Jun 30, 2018 8:15:05 GMT
Spike at the end of the month: what's new?
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coogaruk
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Post by coogaruk on Jun 30, 2018 11:04:34 GMT
As far as the 14-day moratorium for re-investment goes, Ratesetter's systems do not seem able to differentiate between cashed out and new money
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TheDriver
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Post by TheDriver on Jun 30, 2018 15:42:24 GMT
Hi coogaruk , That's because it doesn't! although it can be interpreted either way - like much of the blurb. It's the account which is locked out for selectively placed offers of any funds; auto renewals and repayment-reinvestments are not affected.
HtH
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Post by bikeman on Jul 2, 2018 15:42:48 GMT
Is the new rolling market rate lending actually working? My account has continued to lend at the rate I set before the change.
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Post by yorkman on Jul 2, 2018 18:27:23 GMT
Is the new rolling market rate lending actually working? My account has continued to lend at the rate I set before the change. Yes - it's the repayments (ie interest plus a tiny amount of capital) that is being reinvested at 'your' rate. The remaining capital remains at the original rate.
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