ashtondav
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Post by ashtondav on Sept 16, 2019 17:08:35 GMT
But under the new system you will be able to set a 9% rate, I guess it’s just debatable how often it will be matched.
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Post by cinereus on Sept 16, 2019 19:04:16 GMT
Sorry but can I ask how you're getting close to 6% on the rolling market. Even with massive spikes I don't see how this is attainable. There was a spike a month or two ago and rates went crazy. Likewise, my avg. rate is 8.2% in rolling at the moment. Won't last, obvs.. Edit: Sorry, just re-read your post and my answer wasn't particularly helpful. Why wouldn't a spike explain it? I don't think rolling is at all worth it at circa 3%. At 9%, hell yes. If one invests only in those very rare spikes, and I'm sure I'm not the only one, then it's going to happen. I've never seen spikes in rolling go as high as >8%. And even if they did once a month ago, how on earth is someone achieving this month after month?
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r00lish67
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Post by r00lish67 on Sept 16, 2019 19:34:50 GMT
There was a spike a month or two ago and rates went crazy. Likewise, my avg. rate is 8.2% in rolling at the moment. Won't last, obvs.. Edit: Sorry, just re-read your post and my answer wasn't particularly helpful. Why wouldn't a spike explain it? I don't think rolling is at all worth it at circa 3%. At 9%, hell yes. If one invests only in those very rare spikes, and I'm sure I'm not the only one, then it's going to happen. I've never seen spikes in rolling go as high as >8%. And even if they did once a month ago, how on earth is someone achieving this month after month? Well I assure you they did, and it's not the first time either (although it is very rare). If you do manage to match at those rates, then those rates roll over month after month for as long as the loan isn't defaulted/repaid, just as any other rolling loan.
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Post by df on Sept 16, 2019 19:53:34 GMT
There was a spike a month or two ago and rates went crazy. Likewise, my avg. rate is 8.2% in rolling at the moment. Won't last, obvs.. Edit: Sorry, just re-read your post and my answer wasn't particularly helpful. Why wouldn't a spike explain it? I don't think rolling is at all worth it at circa 3%. At 9%, hell yes. If one invests only in those very rare spikes, and I'm sure I'm not the only one, then it's going to happen. I've never seen spikes in rolling go as high as >8%. And even if they did once a month ago, how on earth is someone achieving this month after month? One has to be very observant and patient to get 8%+ on RS... My average is 6%. It's possible if someone grabbed a "spike chunk" - providing the loan is long term, doesn't repay very early and they have no other investments in RS By the look of it, I don't think we'll see any more spikes on RS.
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Post by cinereus on Sept 17, 2019 9:48:35 GMT
I've never seen spikes in rolling go as high as >8%. And even if they did once a month ago, how on earth is someone achieving this month after month? Well I assure you they did, and it's not the first time either (although it is very rare). If you do manage to match at those rates, then those rates roll over month after month for as long as the loan isn't defaulted/repaid, just as any other rolling loan. Is there some confusion about terminology here? Rolling loans are only a month long and must be re-queued in the market after that month in my experience.
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IFISAcava
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Post by IFISAcava on Sept 17, 2019 9:50:45 GMT
Well I assure you they did, and it's not the first time either (although it is very rare). If you do manage to match at those rates, then those rates roll over month after month for as long as the loan isn't defaulted/repaid, just as any other rolling loan. Is there some confusion about terminology here? Rolling loans are only a month long and must be re-queued in the market after that month in my experience. not any more they roll over at the initially matched rate for the duration of the loan i.e. up to 5 years (unless the loan terminates early) repayments are queued in market
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macq
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Post by macq on Sept 20, 2019 7:25:48 GMT
only had a quick scan of the thread so sorry if this has been answered. My wife who is more the RS person then me has just showed me some figures and its got me wondering what we/me are missing on her maths she took a figure of £5000 as an example and set it at the rates of 4% & 5% as if invested for a set 1 & 5 years as if in a BS/Bank fixed bond product. Knowing this going in (but we assume it would work at any point of taking out?) on both sets of figures it seems to make no sense to pick the lower rate on RS as the penalty rate on withdrawal is covered by the extra % paid and gets better with every year and would even be better then the fee free 3%.Are we missing something?
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r00lish67
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Post by r00lish67 on Sept 20, 2019 7:34:10 GMT
only had a quick scan of the thread so sorry if this has been answered. My wife who is more the RS person then me has just showed me some figures and its got me wondering what we/me are missing on her maths she took a figure of £5000 as an example and set it at the rates of 4% & 5% as if invested for a set 1 & 5 years as if in a BS/Bank fixed bond product. Knowing this going in (but we assume it would work at any point of taking out?) on both sets of figures it seems to make no sense to pick the lower rate on RS as the penalty rate on withdrawal is covered by the extra % paid and gets better with every year and would even be better then the fee free 3%.Are we missing something? Providing you stay invested for just over a year and ideally longer, then yes it makes sense to go with 5 year.
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macq
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Post by macq on Sept 20, 2019 8:06:20 GMT
only had a quick scan of the thread so sorry if this has been answered. My wife who is more the RS person then me has just showed me some figures and its got me wondering what we/me are missing on her maths she took a figure of £5000 as an example and set it at the rates of 4% & 5% as if invested for a set 1 & 5 years as if in a BS/Bank fixed bond product. Knowing this going in (but we assume it would work at any point of taking out?) on both sets of figures it seems to make no sense to pick the lower rate on RS as the penalty rate on withdrawal is covered by the extra % paid and gets better with every year and would even be better then the fee free 3%.Are we missing something? Providing you stay invested for just over a year and ideally longer, then yes it makes sense to go with 5 year. Thanks - that's how it looked to us but in the sense that after a year when its about the same the 90 day fee becomes better then the lower 30 day fee because of the extra % rate.But then it seems to make no sense to offer the lower rate band which is why we assume LW offer only 2 bands One with a fee and One without
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jlend
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Post by jlend on Sept 20, 2019 8:17:43 GMT
Providing you stay invested for just over a year and ideally longer, then yes it makes sense to go with 5 year. Thanks - that's how it looked to us but in the sense that after a year when its about the same the 90 day fee becomes better then the lower 30 day fee because of the extra % rate.But then it seems to make no sense to offer the lower rate band which is why we assume LW offer only 2 bands One with a fee and One without The only cavaet is that you will have some capital and interest paid back every month on the 5 year market so you will have to decide what you do with that, reinvest it in the 5 year market every month in new contracts or do something else. A 1 or 5 year bank bond that was mentioned doesn't work in the same way as the 5 year market in RS.
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Post by propman on Sept 20, 2019 9:39:42 GMT
If you are expecting to keep the money on for less than 4 months, you are better off in the 3% as the 30 day penalty will be more than the extra interest. Between 4 and 11 months you are better off in plus (extra interest of plus >30 days interest, but 90 day penalty more than the extra interest) and 11 or more better off in max (penalty outweighed by extra interest).
It would make sense to put repayments into Plus 11 months to expected requirement and into the lower rate 4 months out to get the maximum net interest. Of course early repayments may allow a saving on the interest lost.
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macq
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Post by macq on Sept 20, 2019 10:02:16 GMT
Thanks - that's how it looked to us but in the sense that after a year when its about the same the 90 day fee becomes better then the lower 30 day fee because of the extra % rate.But then it seems to make no sense to offer the lower rate band which is why we assume LW offer only 2 bands One with a fee and One without The only cavaet is that you will have some capital and interest paid back every month on the 5 year market so you will have to decide what you do with that, reinvest it in the 5 year market every month in new contracts or do something else. A 1 or 5 year bank bond that was mentioned doesn't work in the same way as the 5 year market in RS. probably the way i explained it & did not mean 5 year on RS - i was only trying to compare the idea of using the the new plus and max rates but on a fixed term and used the length of term that RS use now.But you could pick 15 months or 3 years etc as an example as it seems at the point of about a year when the max rate would pull away from the plus rate and covers the plus penalty
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thedog
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Post by thedog on Sept 20, 2019 10:03:01 GMT
Thanks - that's how it looked to us but in the sense that after a year when its about the same the 90 day fee becomes better then the lower 30 day fee because of the extra % rate.But then it seems to make no sense to offer the lower rate band which is why we assume LW offer only 2 bands One with a fee and One without The only cavaet is that you will have some capital and interest paid back every month on the 5 year market so you will have to decide what you do with that, reinvest it in the 5 year market every month in new contracts or do something else. A 1 or 5 year bank bond that was mentioned doesn't work in the same way as the 5 year market in RS. The amortisation payments each month are very important to the decision wrt the 5yr. 1/ On the one hand in a 5 yr RS loan your capital is on average actually invested for just over 2.5yrs (2.65 to be more precise by my maths because capital repayments are slightly weighted to the back-end) because of the repayments. So you are not getting the 5yr rate for 5 yrs. You have made a small loan for a month at that rate, another for 2 months etc.... Only 1/60 of the loan is actually for the whole 5 yrs. 2/ But on the other hand that does mean you are getting fee-free access to some of your money plus the monthly interest. 3/ And then there's the "reinvestment risk" which has been pointed out by r00lish67 - that you have to decide what to do with those repaid funds. All different aspects of the same point but more complex than initially appears.
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macq
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Post by macq on Sept 20, 2019 10:13:04 GMT
In my first post i mentioned my wife playing with some numbers - but the more i think about it with the new product it seems that LW have the better idea of Two rates One fee free and One paying more with a fee and that the middle rate on RS does not make a lot of sense (but assume/hope they have better brains on it then us and we are wrong)
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robski
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Post by robski on Sept 20, 2019 10:17:19 GMT
The only cavaet is that you will have some capital and interest paid back every month on the 5 year market so you will have to decide what you do with that, reinvest it in the 5 year market every month in new contracts or do something else. A 1 or 5 year bank bond that was mentioned doesn't work in the same way as the 5 year market in RS. The amortisation payments each month are very important to the decision wrt the 5yr. 1/ On the one hand in a 5 yr RS loan your capital is on average actually invested for just over 2.5yrs (2.65 to be more precise by my maths because capital repayments are slightly weighted to the back-end) because of the repayments. So you are not getting the 5yr rate for 5 yrs. You have made a small loan for a month at that rate, another for 2 months etc.... Only 1/60 of the loan is actually for the whole 5 yrs. 2/ But on the other hand that does mean you are getting fee-free access to some of your money plus the monthly interest. 3/ And then there's the "reinvestment risk" which has been pointed out by r00lish67 - that you have to decide what to do with those repaid funds. All different aspects of the same point but more complex than initially appears. And of course the fact that loans will repay (customer or provision fund) early. So a 5 year loan is on average a lot less in my experience. I am using the rule of thumb of 20% of all loans will repay a year, or approx 2% of active loans per month, give or take, seems to be reasonable. Which is also an issue if you end up with a few loans for large amounts (relatively). Since they can go out at a good rate, repay very quickly and you may find the MR is a lot lower then. Its why I try to limit my loans to £200 or so, I had a few really large ones that had been waiting to match go out at a decent rate and be on loan for near enough the same time as they waited, that hammers the actual return.
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