ceejay
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Post by ceejay on May 10, 2018 18:29:42 GMT
... P.S. Anybody used Growthstreet, as I'm maxed out on 7 of the biggest platforms & don't want to send my RS returns to any of those As it happens, somebody else mentioned them as an alternative a little while ago and I went to have a look. So far I like what I see but I've only put in a modest amount and I've not been in long enough to have hit any problems. Their product bears a little resemblance to the RS rolling market, though the rate is fixed (currently 5.3%). You lend your money for a month at a time and when it comes out you can have it automatically re-invest, the catch being that you will be out of the market for a variable number of days before your money gets to the front of the queue to be re-lent. At the moment the queue seems to be short - a day or less - but you can see that varying, and of course the cash drag will be proportionally larger if the borrower exercises their right to pay early. However it does seem like a useful hands-off alternative.
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robski
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Post by robski on May 11, 2018 8:04:13 GMT
I was pretty incensed at this change to be honest, considering completely leaving RS When I calmed down I decided I would leave rolling completely, although should rates be significantly higher (almost 100% certain not to be) I may decide to dip back in. I am now no longer allowing my normal approach of reinvesting rolling and also most 3/5 year interest/repayments into rolling. However as I do still like the platform I will now remove some capital and reinvest the rest in 5 year Whilst this didn't tick my immediate availability box, to be honest if things start to go wrong the rolling is probably no better anyway! So I played with a few numbers, my model slightly boosts the benefit of rolling as I simply take 1/12 of the percentage rather than a true APR reinvestment amount. Its marginal difference unless you are investing huge amounts. So based on a newly written 5 year loan at 5.1% and rolling at 3.1% considering fees on the reducing balance, and completely ignoring reinvestment for the 5 year, how long would you need to be invested and to pay the exit fees on 5 year vs rolling? Again tiny diffs but the margin is what we are testing and would apply to for example 6% vs 4% in the same way Excess Margin on 5 year vs rolling 1%, 5 year after fees is better after : never, the interest margin isn't worthwhile 1.5%, 5 year is better after : 23 months (ie somewhere between month 23 and 24 payment being made) 2%, 5 year is better after 9 months, seemingly worthwhile 2.5%, 5 year is better after 7 months 3%, 5 year is better after 6 months So based on the above you only need to keep 5 year loans for a period of 9 months or less and you would be better off than using rolling for that period. Its going to be the way i go now, yes there are slightly higher lock in chances, but now marginal once the change kicks in, and if you realistically think there will be a 2-3% higher rate in 5 year lending as I do, you only need 6-7 months to pass and your better off. I do however plan to watch the rolling. Its potentially a real win you if you can catch a spike. Where as before a spike only gave you 1 month at that rate, now if you manage to grab one you could have that for 5 years. Hope this helps anyone considering going to 5 year from rolling and what the implications are with the fee.
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TheDriver
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Slightly bonkers
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Post by TheDriver on May 11, 2018 19:27:36 GMT
Hi robskiA fairly comprehensive analysis, largely mirroring my thoughts, although I calculated 1% would be better after max 18 months, and 1.5% after a year. As your other rates match my timscales, one of us has an anomaly! I'm fortunate in that I am largely out of Rolling now, having used it as a home for surplus funds while building a rolling 1 year portfolio (due to being too idle to transfer money in regularly!). My main reason for not having much in 5 year is being not willing to fix at current rates that far ahead - except where spikes occurred, if I could catch them! Now, however, RS risk allowing future free exit from lower rates, and having to take the hit on the difference - they must be hoping for inertia or the 14 day quarantine to restrict that.
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Post by bikeman on May 12, 2018 7:55:48 GMT
Can't see why they would do this when they are sitting on over £17M of lenders money that's in the rolling market queues uninvested, costing them nothing and probably earning them interest.
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ashtondav
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Post by ashtondav on May 12, 2018 12:20:04 GMT
Because the 17M will continue to sit there, until it’s owners go for lower rates. RS is not proposing they appropriate lenders’ money and invest it at MR, only AFTER it has been lent out. That 17M will probably never now be lent out, and will be withdrawn probably. I doubt RS is making any interest on those funds, and anyway the advantage of lower rates and more borrowers outweighs it if it did.
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robski
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Post by robski on May 14, 2018 7:43:12 GMT
Hi robski A fairly comprehensive analysis, largely mirroring my thoughts, although I calculated 1% would be better after max 18 months, and 1.5% after a year. As your other rates match my timscales, one of us has an anomaly! I'm fortunate in that I am largely out of Rolling now, having used it as a home for surplus funds while building a rolling 1 year portfolio (due to being too idle to transfer money in regularly!). My main reason for not having much in 5 year is being not willing to fix at current rates that far ahead - except where spikes occurred, if I could catch them! Now, however, RS risk allowing future free exit from lower rates, and having to take the hit on the difference - they must be hoping for inertia or the 14 day quarantine to restrict that. I did exclude reinvestment, did you include? It would probably tip the two earlier ones to around what you said, but I was thinking over that timescale you may not want to reinvest if you were trying to ensure liquidity. Or you may want to do so on a more limited and controlled manner. I did mention no reinvestment in the wall of text. Well my plan is happening, I am reinvesting in 5 year for now but will stop at some point and will go to drawdown then. As soon as I find an alternative outside P2P that I am happy with. Don't want too many current accounts and balances are low anyway. I will probably keep a decent chunk in 1.5% current account so I can jump on any rolling spikes with debit card. I have achieved at around 2% excess over what I would reasonably expected in rolling recently, and with these rates I am happy to bump up my longer term loans, but reduce my investment in RS overall, for now.
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Post by biscuit on May 29, 2018 9:38:48 GMT
Next Ratesetter will be changing its name to Rateset. Too much tweaking going on. Agreed I left Zopa a couple of years ago after they kept tweaking to stop you setting your preffered rate and now we have RS doing the same. I've been happy keeping money in the Rolling Market whilst getting 3.0%, whilst rarely adding new money to it. Now it looks like it would be totally out of my control and I can see me very quickly ending up with 2000-3000 micro loans to manage. Not a happy bunny will need to start looking elsewhere. In the meantime can somebody put my mind to rest about a terrifying scenario please: Say due to a computer glitch RS were unable to lend any money for one whole day, would that then result in the market rate for the following day being set at 0%?
Biscuit
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jlend
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Post by jlend on May 29, 2018 10:25:11 GMT
Next Ratesetter will be changing its name to Rateset. Too much tweaking going on. Agreed I left Zopa a couple of years ago after they kept tweaking to stop you setting your preffered rate and now we have RS doing the same. I've been happy keeping money in the Rolling Market whilst getting 3.0%, whilst rarely adding new money to it. Now it looks like it would be totally out of my control and I can see me very quickly ending up with 2000-3000 micro loans to manage. Not a happy bunny will need to start looking elsewhere. In the meantime can somebody put my mind to rest about a terrifying scenario please: Say due to a computer glitch RS were unable to lend any money for one whole day, would that then result in the market rate for the following day being set at 0%?
BiscuitI am pretty sure they would use the previous days market rate. It wouldnt be in their interest to do anything else in terms of the PR issues it would create.
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jlend
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Post by jlend on Jun 1, 2018 8:26:14 GMT
Has anyone seen a copy of the new investor terms?
They were due to be issued today but i have not seen any.
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69m
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Post by 69m on Jun 2, 2018 20:19:58 GMT
According to the revised terms published yesterday:
So it seems that there won't be an option to have Rolling Market capital repayments sent to the Holding Account. They'll be re-invested in perpetuity at Market Rate, unless a withdrawal request is made (which would then trigger the 14-day 'fair usage' clause).
I'm presuming - perhaps incorrectly - that Rolling Market interest payments sent to the Holding Account first are deemed to be 'new funds' i.e. they can then be lent via the Rolling Market at a user-set rate.
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happy
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Post by happy on Jun 2, 2018 20:46:16 GMT
According to the revised terms published yesterday:
So it seems that there won't be an option to have Rolling Market capital repayments sent to the Holding Account. They'll be re-invested in perpetuity at Market Rate, unless a withdrawal request is made (which would then trigger the 14-day 'fair usage' clause).
I'm presuming - perhaps incorrectly - that Rolling Market interest payments sent to the Holding Account first are deemed to be 'new funds' i.e. they can then be lent via the Rolling Market at a user-set rate.
I understood that they would not invested in perpetuity but until the underlying loan contract matures, and then you get your capital back. So anything up to 5 years (or so!). This is why RS have made this change to the market as it solves their maturity transformation risk as you can only get before term now by selling and you can only sell if someone else buys your contract. Before they gave you your money back every month and then hoped most would flow back into the rolling market each day to maintain liquidity. Regarding your last question, I'm assumed so as well but as it does not specifically state what happens to interest returned to holding we may have to wait and see. I have stopped all automatic reinvestment into rolling and will see what the market does come the 6th. I may put some money back in at 5% and above and see it I can get it taken up if the market becomes unstable as I think >=5% with theoretically instant access is not a bad place for some short-term money.
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69m
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Post by 69m on Jun 2, 2018 21:55:18 GMT
According to the revised terms published yesterday:
So it seems that there won't be an option to have Rolling Market capital repayments sent to the Holding Account. They'll be re-invested in perpetuity at Market Rate, unless a withdrawal request is made (which would then trigger the 14-day 'fair usage' clause).
I'm presuming - perhaps incorrectly - that Rolling Market interest payments sent to the Holding Account first are deemed to be 'new funds' i.e. they can then be lent via the Rolling Market at a user-set rate.
I understood that they would not invested in perpetuity but until the underlying loan contract matures, and then you get your capital back. So anything up to 5 years (or so!). This is why RS have made this change to the market as it solves their maturity transformation risk as you can only get before term now by selling and you can only sell if someone else buys your contract. Before they gave you your money back every month and then hoped most would flow back into the rolling market each day to maintain liquidity. Regarding your last question, I'm assumed so as well but as it does not specifically state what happens to interest returned to holding we may have to wait and see. I have stopped all automatic reinvestment into rolling and will see what the market does come the 6th. I may put some money back in at 5% and above and see it I can get it taken up if the market becomes unstable as I think >=5% with theoretically instant access is not a bad place for some short-term money. RateSetter's original blog post said "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." This wording suggests that the underlying loans are fully amortising, but it's certainly open to interpretation.
Likewise, I've turned off Rolling Market reinvestment until the effects of these changes on the Market Rate become clearer.
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happy
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Post by happy on Jun 2, 2018 21:59:31 GMT
RateSetter's original blog post said "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." This wording suggests that the underlying loans are fully amortising, but it's certainly open to interpretation.
Likewise, I've turned off Rolling Market reinvestment until the effects of these changes on the Market Rate become clearer.
Sorry, yes you are correct, the loans are amortising, well mostly they are but remember that development loans won't be and some other business loans may not be so you may hold the full capital amount for the term (probably not 5 years for the development loans though)
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jlend
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Post by jlend on Jun 3, 2018 6:16:56 GMT
Rolling rate 2.3% today. Only been that low a couple of times since xmas.
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TheDriver
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Post by TheDriver on Jun 3, 2018 18:46:54 GMT
I noticed Rolling was matching at 1.8% a couple of days ago!
In the new process monthly repayments will be reinvested, although interest can be retained. Therefore it seems to me capital will be permanently invested unless it's withdrawn, because each monthly repayment will be placed into new loans. Therefore the length of the original loan is irrelevant because by the time it finishes the capital will all be in other loans!
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