ashtondav
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Post by ashtondav on Sept 3, 2019 16:37:44 GMT
Maybe the number of rolling investors dwarfs the 5 year squad, so an access account, plus and max are product “no brainers”
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Post by Deleted on Sept 3, 2019 16:37:44 GMT
It would seem that if you have recent investments in the 5 year market you have least flexibility. Moving out of existing loans into the new system will incur existing punitive high rate (which was there to prevent you pulling out early, not to stop you re-investing in the new products). If you do nothing but continue re-investing in the 5 year market there will come a time (in the not too distant future) when you might be unable to. There is also no guarantee that if you stay in that market that you have access to all of the potential loans that Ratesetter is selling. The possibility is that market will dry and re-investment will take ever longer. It all depends how Ratesetter decides to operate. So it is clear that the one year and five year markets are in drain-down to oblivion mode. Ratesetter is not taking anything away, (except the reason you originally invested with them). They are just making it inconvenient to stay with the old system. This is precisely what Zopa did, replacing provision fund backed lending with supposedly higher interest rates and “you take the risk” investments. No thanks. The “new, better rates” have turned out to be no better than anyone else’s. It remains to be seen whether Ratesetter’s new funds go down the same route. I would expect that future changes will make ratesetter’s model no different from anybody else’s. Maybe they will be bought out. maybe they will change their name to reflect the fact that you can no longer change loan rates. Maybe all of these peer-to-peer companies will end up like banks or community schemes where you have a fixed rate of return and no say in fixing rates - effectively morphing in to the rest of the banking sector.
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Post by propman on Sept 3, 2019 16:51:06 GMT
It would seem that if you have recent investments in the 5 year market you have least flexibility. Moving out of existing loans into the new system will incur existing punitive high rate (which was there to prevent you pulling out early, not to stop you re-investing in the new products). If you do nothing but continue re-investing in the 5 year market there will come a time (in the not too distant future) when you might be unable to. There is also no guarantee that if you stay in that market that you have access to all of the potential loans that Ratesetter is selling. The possibility is that market will dry and re-investment will take ever longer. It all depends how Ratesetter decides to operate. So it is clear that the one year and five year markets are in drain-down to oblivion mode. Ratesetter is not taking anything away, (except the reason you originally invested with them). They are just making it inconvenient to stay with the old system. This is precisely what Zopa did, replacing provision fund backed lending with supposedly higher interest rates and “you take the risk” investments. No thanks. The “new, better rates” have turned out to be no better than anyone else’s. It remains to be seen whether Ratesetter’s new funds go down the same route. I would expect that future changes will make ratesetter’s model no different from anybody else’s. Maybe they will be bought out. maybe they will change their name to reflect the fact that you can no longer change loan rates. Maybe all of these peer-to-peer companies will end up like banks or community schemes where you have a fixed rate of return and no say in fixing rates - effectively morphing in to the rest of the banking sector. Personally I invested with them as I thought that their offering gave an attractive reward for the risk. I advocated a similar system for Zopa when they went fixed rate, they choose the rate and you agree to that rate +/- with offers matched lower offers first. If they do move out of the 5 & 1 year markets, it will be interesting to see what happens to rates. I for one would require at least the current visibility of offers on the market. The old MR did sometimes get completely divorced from the rates achievable withgaps of over 1% frequently achieved. This could happen again with Max + 1% matched regularly at the end of the week. However, how much would people factor in the 3 months interest lost? I suspect that many investors will up the rates more for this than it will actually cost them as they will keep the money on for years.
I do think that it might paradoxically make withdrawal much more likely as it is a sunk cost. The only "cost" of exiting early is if you later want to put the funds back (ignoring the timing). While I for one have balked at paying to withdraw when there is a fee free option.
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Post by Deleted on Sept 3, 2019 17:05:37 GMT
In the investor terms, Ratesetter attempts to explain how money will queue based on which product you invest in.
They say that an investor the Max product requesting queue at 5.1% will be at the same point in the queue as somebody offering 3.1% from the Access product but behind a person in the Plus product offering 4%.
Sure, except this example does not explain why this is so, does not explain the relative importance of the queue properly and does not say that this will always and ever be the case.
So is there actually a defined x in Access equals x+1 in Plus and X+2 percent in Max, or is this example just a convenient marketing example with no relevance to how things may or may not operate??? Answers probably badly explained somewhere in the small print.
And clearly, if you foul up which product you invest in (or you determine that Ratesetter has subtly changed the rules without telling you) it could cost you lot of money to move from none product to another. And of course, Ratesetter reserves the right to,change the cost of taking money from a product.
So the chances are that you won’t be gambling rates of interest so much gambling against any future changes Ratesetter might choose to make.
Will rate ratesetter continue to display what contracts you actually have within each new product or is about to go “dark” and “opaque” like Assetz Capital? Otherwise how can you know that your Max standard plus “y” percent is paying back correctly? For each and every separate loan?
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Post by propman on Sept 3, 2019 17:28:55 GMT
Thanks for that, where did you find the example?
If they follow this precedent they wouldn't increase the number of days and I can't see a huge hike in rates so the fee wouldn't change much. If repayments are made and based on tghe whole portfolio, this would mean higher repayments initially than 5 years, about the same in the first 2 years then slower with no final repayment until Ratesetter have run down their entire book! (although I reckon about 95% repaid in 5 years - I have assumed a 5% repayment of outstanding balance each month).
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alanh
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Post by alanh on Sept 3, 2019 18:24:01 GMT
My question too keystone. All my rolling money is invested at 6-8% and it seems to roll each month into a new one month loan at that same original rate. Thus I have a portfolio of rolling money that maintains a rate of 6-8%. If these now roll into loans at 3% then after one month of this new system I will have a portfolio of rolling money all at 3%, in which case I am without any shadow of a doubt OUT.
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Post by Deleted on Sept 3, 2019 18:26:33 GMT
My current average invested funds in rolling rate is above 6%. Will this change mean that they will renew at 3.0% over the next month after October when it changes to Access? I'd like to know the answer to this too.
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Post by propman on Sept 3, 2019 18:57:59 GMT
I can't see anything to suggest that the rolling will change except where the rate is >8% perhaps when it is >5% above their rate.
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Greenwood2
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Post by Greenwood2 on Sept 3, 2019 19:22:09 GMT
I think the worst problem is you will never re-invest at anything like these rates.
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Post by Deleted on Sept 3, 2019 19:45:04 GMT
I think the worst problem is you will never re-invest at anything like these rates. Agreed but that's true for the current situation as well.
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Post by Deleted on Sept 3, 2019 20:28:45 GMT
The wording for Rolling says
the only effective change being the move to Going Rate.
so let's hope that's the case and existing loans will be allowed to continue.
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Post by pachiraaquatica on Sept 3, 2019 22:17:34 GMT
My question too keystone. All my rolling money is invested at 6-8% and it seems to roll each month into a new one month loan at that same original rate. Thus I have a portfolio of rolling money that maintains a rate of 6-8%. If these now roll into loans at 3% then after one month of this new system I will have a portfolio of rolling money all at 3%, in which case I am without any shadow of a doubt OUT. I am also in this situation, though with an average rolling rate of 4.4%. Most of these loans have more than 12 months of reinvestment remaining, the highest being 58 months. These investments were made because of the probability of long dated months remaining. My funds could have been invested elsewhere. So not only will I be out, I will also be giving Ratesetter just one star on Trust Pilot for reneging on their offer.
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Post by pachiraaquatica on Sept 3, 2019 22:36:24 GMT
I've sent an email to Ratesetter to ask about this. Regarding the months remaining, I have pointed out that when the rolling market was introduced, they stated that by reinvesting the capital at the same rate, the were giving me certainty as to the rate I would receive in the future.
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jlend
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Post by jlend on Sept 4, 2019 6:00:14 GMT
I've sent an email to Ratesetter to ask about this. Regarding the months remaining, I have pointed out that when the rolling market was introduced, they stated that by reinvesting the capital at the same rate, the were giving me certainty as to the rate I would receive in the future. From the FAQs "We will let you know of any changes to the Going Rate with 14 days’ advance notice. Changes in the Going Rate will not affect your existing investments which will continue at the same rate as before; changes in the Going Rate will only apply to new investments/reinvestments." Hopefully the FAQ above is clear. Just to expand on it. Once a loan matches at a specific rate, that rate remains unchanged for the duration of the loan. That is true for the old and new accounts. It also the same in Lending Works for example. It is worth remembering though that the loan will gradually be paid off by the borrower as I am sure you know. Also all the loans may be repaid early either by the borrower or the PF in the event of a default of some loans. So yes you are guaranteed the same rate for the duration of the loan, but the duration of the load and the amount outstanding is not guaranteed. Any repayments will be reinvested back in the market automatically at either the going rate or a rate that you choose. It is up to you what rate you try and get. Obviously the higher the rate the less likely it will be matched at any one time. Only time will tell what happens to rates on average and how many times we see rates shoot up for short periods of time.
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rscal
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Post by rscal on Sept 4, 2019 6:03:53 GMT
My current average invested funds in rolling rate is above 6%. Will this change mean that they will renew at 3.0% over the next month after October when it changes to Access? Yes, I think so. I would assume your existing rolling loans will continue 'to roll' at those rates since they are matched to specific contracts and individual borrowers are (in your case) 'stuck' with their arrangments which would conitnue to amortise for them in the same way.
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