tyrex
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Post by tyrex on Jan 3, 2019 18:48:26 GMT
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rscal
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Post by rscal on Jan 3, 2019 19:01:00 GMT
No, they said the rolling market will continue as now
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morris
Member of DD Central
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Post by morris on Jan 3, 2019 19:17:42 GMT
Surely this will depress rates in the yearly market if they are increasing the supply.
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Stonk
Stonking
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Post by Stonk on Jan 3, 2019 19:23:05 GMT
I have no idea what this means!
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tyrex
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Post by tyrex on Jan 3, 2019 19:27:05 GMT
I have no idea what this means! Quite. I was under the impression that all loans were detached from the lending markets anyway.
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Stonk
Stonking
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Post by Stonk on Jan 3, 2019 19:46:55 GMT
I took some fresh air, and here's my take on it.
Some loans have no repayments during their term, just a lump repayment at the end. This is typical of a property development loan, where the developer has no income during the development phase from which to fund monthly payments, so the loan is intended to be repaid upon sale of the property at the end. Loans of this form cannot be put on the Rolling or 5 Year markets, because the loans on those markets have to have monthly repayments.
From February, somehow, RS are going to squeeze and massage those loans onto the Rolling market. As for the mechanics of this? I have not a clue ....
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mary
Member of DD Central
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Post by mary on Jan 3, 2019 20:00:34 GMT
I took some fresh air, and here's my take on it.
Some loans have no repayments during their term, just a lump repayment at the end. This is typical of a property development loan, where the developer has no income during the development phase from which to fund monthly payments, so the loan is intended to be repaid upon sale of the property at the end. Loans of this form cannot be put on the Rolling or 5 Year markets, because the loans on those markets have to have monthly repayments.
From February, somehow, RS are going to squeeze and massage those loans onto the Rolling market. As for the mechanics of this? I have not a clue ....
A reaction to the (infrequent) spikes above 8% in the 1 year? My average 1 year is over 6.2%. Forcing this down to Rolling rates will see me exit entirely. Without more detail it’s difficult to understand how this would work. For Rolling to be unchanged, as stated, RS would have to front the monthly interest payments, which is surely disallowed under FCA rules? Unless they are going to start to copy Lendy, MT, etc, and front load development loans with full interest withheld? In this case the 1 year is gone within a year as older loans repay, and again I’m out.
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Post by df on Jan 3, 2019 20:05:56 GMT
I took some fresh air, and here's my take on it.
Some loans have no repayments during their term, just a lump repayment at the end. This is typical of a property development loan, where the developer has no income during the development phase from which to fund monthly payments, so the loan is intended to be repaid upon sale of the property at the end. Loans of this form cannot be put on the Rolling or 5 Year markets, because the loans on those markets have to have monthly repayments.
From February, somehow, RS are going to squeeze and massage those loans onto the Rolling market. As for the mechanics of this? I have not a clue ....
This is my understanding too. As for mechanics of it, it could be similar to AC's QAA/30day where you invest in the pool that underwrites the loans or fills the gaps? I'm not too worried about this change as long as an instant access at no cost remains as it is now, which seems to be the case.
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ceejay
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Post by ceejay on Jan 4, 2019 12:36:36 GMT
Surely this will depress rates in the yearly market if they are increasing the supply. Yep, looks that way to me too. Shifting demand from 1-Year to Rolling - or allowing both markets to satisfy both sets of borrowers - suggests that the rates will become more closely aligned.
We'll have to wait and see, of course, but I wouldn't plan to be reinvesting much in the 1Y market after this happens.
All the more reason to be avoiding RS for IFISAs, I think.
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Post by gravitykillz on Jan 4, 2019 16:08:18 GMT
I dont understand what difference this will make to the rolling market. Can anyone explain in simple terms ?
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rscal
Posts: 914
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Post by rscal on Jan 4, 2019 18:03:59 GMT
Surely this will depress rates in the yearly market if they are increasing the supply. Yep, looks that way to me too. Shifting demand from 1-Year to Rolling - or allowing both markets to satisfy both sets of borrowers - suggests that the rates will become more closely aligned.
We'll have to wait and see, of course, but I wouldn't plan to be reinvesting much in the 1Y market after this happens.
All the more reason to be avoiding RS for IFISAs, I think.
(Did anyone else see the Rolling 'last match at 0.00%' when logging in this morning?)
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mary
Member of DD Central
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Post by mary on Jan 4, 2019 18:54:38 GMT
I dont understand what difference this will make to the rolling market. Can anyone explain in simple terms ? Currently Rolling has an average term of 30+ months, so adding development loans, which are typically 12 months, will decrease the average term (although probably the average will still be >24 months). Increasing the Borrower demand in Rolling may increase rates a little (the 1 year market is far smaller than Rolling). Rates in the 1 year market will decline as Borrowers are moved to Rolling, and likely the 1 year option will be removed at some point leaving only Rolling and 5 Year options. Some (many?) Lenders to the 1 Year market may exit RS (like me). Overall, RS will lower their average rate paid to Lenders. Good for the business, bad for savvy Lenders who only lend when rates move higher.
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Post by ruralres66 on Jan 5, 2019 20:46:17 GMT
RATESETTER plans to add one-year loans to its Rolling Market, after revealing that its average rate beat the FTSE 100 across 2018.
The peer-to-peer platform currently offers three options to investors: one-year, Rolling Market, and five-year loans. However, the one-year market is the only one which will repay investor’s money plus interest at the end of the term as opposed to loans that pay it back in monthly instalments. As a result, the one-year market is the platform’s least popular, holding just 15 per cent of RateSetter’s total funds.
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rscal
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Post by rscal on Jan 5, 2019 21:50:39 GMT
RATESETTER plans to add one-year loans to its Rolling Market, after revealing that its average rate beat the FTSE 100 across 2018.
The peer-to-peer platform currently offers three options to investors: one-year, Rolling Market, and five-year loans. However, the one-year market is the only one which will repay investor’s money plus interest at the end of the term as opposed to loans that pay it back in monthly instalments. As a result, the one-year market is the platform’s least popular, holding just 15 per cent of RateSetter’s total funds.
Ha... ha... HA!
You take the worst stock market year in... (how long?) and then say "Hey, 3.1% nudge, nudge!" by way of comparing your product.
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corto
Member of DD Central
one-syllabistic
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Post by corto on Jan 5, 2019 22:14:42 GMT
(Did anyone else see the Rolling 'last match at 0.00%' when logging in this morning?) Yes. No idea what that was.
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