How far should SavingStream cut interest rates?

Must admit forgot about the ones who would invest for less while 12% is achievable, I agree if the rate decreases it would lead to another discussion

Well, that's two "votes" demonstrating that a drop in rate would work to reduce demand.
The email is about their new rationing system, which presupposes continued excess demand. This poll is about something else, what interest rate it would take to reduce demand to match supply.
Well, to some degree, since there is value in both diversification and customer service. I haven't been having much trouble selling loans on a secondary market at 10-11% and there are still people who are willing to invest in unsecured lending with protection funds at less than 6% or secured at under 6%. That's the point of this poll, though, to get some idea of what rates people think it would take to cause enough money to go elsewhere to get demand and supply aligned.

Personally I'm glad that they decided to go with a rationing system but then I'm not going to be in the heavily capped group of investors with lots of money.

This thread has really been overtaken by events as SS have introduced pre-funding and stated quite clearly that there is no intention in the foreseeable future to change from a flat 12% interest rate (hurrah!). But I still can't resist having my say.

If SS were to reduce rates slightly say to 11% or 10% it would still be attractive to many and the simplicity of the site would still be a draw. So I suspect most loans would still fill OK. Maybe some of the larger ones might need a bit of help in the form of a launch cashback. Some of the bluster about not investing with SS anymore is more about scaring SS so that rates aren't lowered because none of us want to see that.

But it is true to say that lower rates would put off some because the reward would genuinely not be enough and also some investors would feel let down and no longer have loyalty to the site.

So if SS really wanted to reduce rates then the way to do it would be to offer a range of rates which better reflect the risk and demand for loans. This would be particularly appropriate as and when loans become placed in trust. Initially some rates may be higher than 12% (big risky loans) and some would be lower (small with low LTV). At outset the average interest rate may be 12% but over time it would be relatively easy to start sneaking the average rate lower without making it too obvious.

So if we do see a range of interest rates being introduced this is something to watch out for.

A good response to my unthinking comment 'nobody wants to see this...'  While it doesn't invalidate my overall point it is a good reminder to consider all statements carefully.

Price is not the only mechanism involved in determining demand.  To your "... free market." comment I can only suggest reading "23 Things They Don't Tell You About Capitalism" by Ha-Joon Chang.  I didn't agree with everything he had to say, but even the bits I didn't agree with made me stop and think.

If you weren't already aware of his background, you may find it of use to read the article about Mr. Chang, a Korean Cambridge economics professor and fellow of the Center for Economic and Policy Research who's worked for the World bank, Asian Development Bank and European Investment Bank. Or perhaps watch the Google talk he gave. Or read his current summer column series in FT Weekend magazine. He's correct that we don't live in a purely capitalist society but instead have widespread government intervention.

Of course this poll is fundamentally about somewhat classic supply and demand theory and the elasticity of demand... while SavingStream's actions is a non-classical rationing approach that they say is in part to help drive growth of the platform, a judgement that I'm pretty sure they are correct about.