adrianc
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Post by adrianc on Jun 7, 2015 20:11:48 GMT
So 5% for 12mo is £18m... ...and raise the £12m you'd need (you get some interest and repayments in the year)... 50%?!?
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adrianc
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Post by adrianc on Jun 7, 2015 20:12:22 GMT
Quick google finds the Daily Wail claiming £23m monthly volume on RS last summer - so north of that now. Call it £30m/mo. So 5% for 12mo is £18m... Ah'm ooot. Maybe we could pool our funds and make a combined offer! Cool. You're in for £17,995,000?
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Post by yorkshireman on Jun 7, 2015 21:31:01 GMT
If another platform (new or old) offers the old style no provision/safeguard offering and the ability to lend riskier loans @ westonkevRSFlatulent Cowboys do that every day.
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bigfoot12
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Post by bigfoot12 on Jun 7, 2015 23:21:31 GMT
Not sure I understand. I made 5% of £23m every month for a year a requirement of £12m, because after a month there is interest paid and some capital repaid and so on. Is that what you were questioning?
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adrianc
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Post by adrianc on Jun 8, 2015 7:28:45 GMT
£23m was a year ago's figure - hence the rounding-up to £30m/mo, £360m/yr - so 5% is £18m/yr, £1.5m/mo.
Putting £12m on the table and hoping that'd give you £18m through early paybacks and interest would require 50%.
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bigfoot12
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Post by bigfoot12 on Jun 8, 2015 12:27:23 GMT
£23m was a year ago's figure - hence the rounding-up to £30m/mo, £360m/yr - so 5% is £18m/yr, £1.5m/mo. Putting £12m on the table and hoping that'd give you £18m through early paybacks and interest would require 50%. Sorry I hadn't spotted that £23m was a year old. I have re-calculated using £30m. Now I think you would need £15m. That is normal interest payments and capital repayments total about £3m. I am not assuming any early repayments. I am assuming an average rate of 5.5% for 36 months.
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spiral
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Post by spiral on Jun 8, 2015 13:30:53 GMT
One thing is certain now though, with the rates achieved by institutional money, it is not them that push rates down!
This leads to the next question though, westonkev said previously that institutional money does not get preferential treatment. OK I can go with that but this raises the question, how do they match them to the higher rate loans.
I originally assumed (along with most others I suspect) that they placed their money in the queues and waited for a match like everyone else.
If that was true though, even without the PF insurance, their matches would consist of some loans in the 7-8% range and certainly not a rate skewed towards the high teens.
This means to me that specific loans must be singled out for their investment probably because RS deem them too risky to charge anything realistically acceptable to the borrower for including in the PF and/or the size of the loan to risk ratio would stress test the PF in the event of a default. So in otherwords would have previously been rejected by the risk assesors.
That said, I too wouldn't mind a proportion of unprotected loans in my portfolio in order to (hopefully) boost my returns.
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Post by Deleted on Jun 8, 2015 15:52:39 GMT
One thing is certain now though, with the rates achieved by institutional money, it is not them that push rates down! This leads to the next question though, westonkev said previously that institutional money does not get preferential treatment. OK I can go with that but this raises the question, how do they match them to the higher rate loans. I originally assumed (along with most others I suspect) that they placed their money in the queues and waited for a match like everyone else. If that was true though, even without the PF insurance, their matches would consist of some loans in the 7-8% range and certainly not a rate skewed towards the high teens. This means to me that specific loans must be singled out for their investment probably because RS deem them too risky to charge anything realistically acceptable to the borrower for including in the PF and/or the size of the loan to risk ratio would stress test the PF in the event of a default. So in otherwords would have previously been rejected by the risk assesors. That said, I too wouldn't mind a proportion of unprotected loans in my portfolio in order to (hopefully) boost my returns. "One thing is certain now though, with the rates achieved by institutional money, it is not them that push rates down!" Help me how you work that out?
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Post by yorkshireman on Jun 8, 2015 17:21:56 GMT
"One thing is certain now though, with the rates achieved by institutional money, it is not them that push rates down!" Help me how you work that out? Ditto.
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Post by p2plender on Jun 8, 2015 21:25:57 GMT
Must be 'off market' loans..
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Post by westonkevRS on Jun 9, 2015 4:54:39 GMT
One thing is certain now though, with the rates achieved by institutional money, it is not them that push rates down! Specific loans must be singled out for their investment probably because RS deem them too risky to charge anything realistically acceptable to the borrower for including in the PF and/or the size of the loan to risk ratio would stress test the PF in the event of a default. So in otherwords would have previously been rejected by the risk assesors. Obviously I cannot go into the details of our partner agreements, this to a degree is a matter of trust between you as lenders and RateSetter. This trust must exist already in varying degrees, or you wouldn't risk your hard won money with us. Institutional money place with RateSetter to date has not surpessed rates. Not only due to the process (again, you'll have to trust me as I cannot go into detail), but evidenced by the lender rates achievable in the last 12 months or so. In fact a bad statistician might find an inverse relationship and conclude that institional money has pushed rates up! The institutions have all published their target returns (see the Investors Chronicle article, but typically 8-15%), which are higher than the standard rates achievable across most the platforms. Some use leverage to boost returns, but they also take loans with potentially higher unprotected returns. As the risk manager with a de facto responsibility for ensuring the strength, size and ongoing sustainability of the Provision Fund this isn't a risk I am willing to expose our core lenders to. I make no apology for our boring risk adverse approach to protect our retail investors, who remain the core 98% of our lender base. I appreciate some would like the risk of an unprotected loan book to boost returns, but this isn't the RateSetter core offering to retail lenders. And probably never will as it would cloud the public offering. Perhaps under an alternative brand, but not RateSetter. @ westonkevRS
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spiral
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Post by spiral on Jun 9, 2015 8:16:05 GMT
"One thing is certain now though, with the rates achieved by institutional money, it is not them that push rates down!" Help me how you work that out? I'm basing it on the assumption that the large wads of cash that drop in here and there at well below MR cannot be from institutional money as they will not get returns up in the teens. I accept that volume of money must take something out of the borrowers pot thus leaving less for us mere mortal lenders but based on my assumptions this money probably would never have been deemed suitable to come our way anyway, so would have just been rejected by the risk assessors.
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Post by wibble on Jun 9, 2015 10:54:23 GMT
I make no apology for our boring risk adverse approach to protect our retail investors, who remain the core 98% of our lender base. I appreciate some would like the risk of an unprotected loan book to boost returns, but this isn't the RateSetter core offering to retail lenders. And probably never will as it would cloud the public offering. Perhaps under an alternative brand, but not RateSetter. @ westonkevRSI very much like this approach - there are plenty of other offerings throughout the P2P market to cater for many requirements. Please keep it boring :-) As you say, Ratesetter could always start an additional brand if the appetite was there, but Marketing 101 - don't confuse the existing brand and keep it simple for numpties like me! Zopa's ever changing approach to lending, even post-Safeguard fund, was one of the reasons I left them completely - confused and frustrated me.
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Post by Deleted on Jun 9, 2015 11:01:27 GMT
I can see what you are saying but I'm not so sure those higher risks would have been kept away from us. If that is the case then RS is really running two different systems and to claim only 25% are Insts is just wrong. In fact that should be "we are running two different systems under the same brand name so we can be all retail friendly" not in itself a bad business model but a tricky knife edge to walk down ethically. In fact you could argue that having that higher risk business mix rolled into the main system might have increased the volatility of the rates earned offering other opportunities to retail.
No I think your assumptions open up a whole new can of worms and further questions.
My view would be that by having a Inst based sub brand does mean that you have to split the loans so that pushes the retail sub brand down.
On the other hand I like the boring Ratesetter rates, very useful as a base load for loans and as a "gateway (as we now have to call things) P2P" to other portals.
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spiral
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Post by spiral on Jun 9, 2015 12:28:18 GMT
I can see what you are saying but I'm not so sure those higher risks would have been kept away from us. If the interest rate paid by the borrower is driven by the market and RS just add fees and provision fund insurance in order to balance the risk, the sort of up front money to turn a 6% rate into 15% on a £5000 5 yr loan is £1048.68 i.e. you would need to borrow £6048.68 but only receive a £5000 loan. Both of these scenarios would result in monthly repayments of £115.49 but the higher interest rate loan would always owe less capital (as its base level is £5K) and therefore be better suited to anyone that may want to repay early. Now I'm not a borrower nor an institution but I suspect the monies involved here are 10 to 20 times greater than my example so if you wanted to borrow £100K, you would need a loan of £121K to turn a 6% rate into 15%. I suspect this would put off most borrowers, especially if they intended to pay back before term whereas the institution route probably enables them to borrow £100K with say a £1K RS arrangement fee at 15% interest rate, something just not available from RS's market place.
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