"Your Rate" functionality is changing

As feedback, could I suggest the email should have gone to all lenders.

While I don't currently use YR, I have in the past and might do so in the future and don't think its right for RS to only personally inform customers of these changes purely on the basis of who is using YR on once specific day.

Some will obviously read this forum (as I do) or your blog (I don't) but not all.

I see the MR in 3 YR has today gone down hugely to 4.8%.

1700 orders & £+200k at 4.8%.

I guess that is the kind of volatility you get when you set the MR according to the prior 24 hours average. When that prior 24 hrs is a v. quiet Sunday with just £12,8k of matching (I assume that was 1 or perhaps just 2 matches).

The new MR setting is just leading to v high volatility. Madness….
 

Has the MR functionality forced lenders to be more active?

On this thread and some others, forum lenders have queried aloud if the change to MR methodology (which to be blunt, had to happen) has put non-active, Market Rate lenders at a disadvantage. And if it has forced people to set their own rate, some forum members have even raised the prospect that RS did this on purpose (when actually the optimal business solution would probably be a majority of silent MR lenders with a minority active segment helping set the rates)

Anyways, as promised I've performed the analysis across the four markets looking at the lender return by MR vs. actively setting a rate. Unfortunately I can't publish this data here as the split between lender returns isn't available on the web page or on the data-sets to downloadable (which has the loan rate, not the contracts). However I will ask internally.

The answer is that there is no discernible difference in the returns achieved between being an active RateSetter and an inactive MR follower (when all active lender strategies are averaged).

However this is an average and probably doesn't give an indication on if some lenders can obtain higher returns by following a patient strategy. For example the rates achieved by setting own rates could be lower from lenders jumping the queue to get their money lent faster (i.e. me) versus people always tracking the market and aiming for .02-0.3% higher (e.g. many forum members). However the net result of all these rate setting strategies when averaged just equals the MR returns!

@westonkevRS



link.ratesetter.com/8Ls46js

www.linkedin.com/profile/view?id=19236219

Agreed! I'm a recent entrant to the monthly, but I got some 4.9% today and my monthly average is now 4%.

By being active I'm helping tomorrows MR move upwards   No need to thank me, I'm happy to help out.

I think your logic is correct, and I'm going to have to eat some humble pie as I helped forumulate the answer.

Clearly I hadn't thought through the process in quite as much detail. No excuses but I personally focus on the 5-yr lending market where this is not automatically refillied as per the monthly money. Most of 5-yr money will be based on new loans (there will be some anomalies such as sell-out), whereas monthly will be a mixture of batch overnight and during the day. The daily MR callculation doesn't exclude MR set loans specifically but the timing will exclude the overnight batch process.

I haven't checked your numbers but of the £4.6m contracts matched, around £2m or so would have been in the batch or outside the 6am to 10pm window, leaving £2m plus on that busy Friday but a proprtionaly smaller segment of monthly money.

I guess the question, is the reduced £800k and approx 2,000 monthly money contracts (rather than 4,505) statistically valid. Either way, the methodology is better based on these actuals than orders, and subsequent MR rates don't indicate the change pushed the rates down.

Thank you for you diligence, I'll ask the blog response to be changed.

Kevin.