Fixed Interest Loans

To cater for the hundreds of millions of ISA pounds most platforms are going to have to simplify their lender interface, and reverse auctions are going to be incompatible with huge sums of money from passive investors.  The surprise is FC have maintained it for as long as they have. FK to all intents and purposes operates fixed rates with the underwriter(s) taking most of each loan at the "reserve rate". AC abandoned reverse auctions after 2 attempts neither of which were pretty.   Which just leaves ReBS and some TC loans operating reverse auctions.   TC reverse auctions suffer from poor take up as people like me only bid on fixed rate loans to avoid the risk of being knocked out.

Personally I have found the "gaming"  of the FC auction process in very poor taste as the flippers are simply extracting margin from other lenders. However the flipside is the flippers have been providing a defacto underwriting service, and that margin is the equivalent of underwriter fees on AC/TC/SS etc.


Whilst none of that is of direct relevenevce to RS, I can't help but think the RS new lender displays are at least in part an attempt at the simplification needed pre-ISA but have not been sufficeintly well thought through.


How well platforms cater for ISA money will determine IMO those which have a long term future and those that don't.  FC are to be commended for taking action now to allow a few months to bed in before the arrival of ISA's.

The borrowers have nearly always had "fixed interest" in that they are quoted and isn't variable. This borrower side aspect is stable, and perhaps isn't comparable to FC where the auction process causes uncertainty in terms of rate and time.

The ability to be a RateSetter is clearly in our DNA, is a USP and basically in our name! The whole market philosophy and the democratisation of money and its cost is the whole point - at least for me and the co-founders (although not all colleagues agree, but their fools and I ignore their forlorn complaints). 

The difficulty is how to ensure me you you folk can set our own rates, but also make it simple, clear and boring for "high street". The recent change is a perhaps clumsy attempt to do that. I appreciate we could have recommended a whole bunch of solutions rates, but it was clearer to offer a rate where the money would be lent there and then and the rate chosen - even if slightly sub optimal. Making is simple and clear, and then having to explain their money wasn't lent because of the MR being above the latest offers, daily movements, blah blah, would have made it pointless. The only realistic offer was the "lend now". With experience, new lenders could then set higher rates (although interestingly, several "experts" got too greedy this weekend and lost out).

I know some don't like the position and wording of the "be an expert" link to the markets. But I think these are minor quibbles.

I apologize if there have been a lot of changes recently, hopefully this will settle down. Especially post FCA authorisation.

Kevin.

Not so, dear westonkevRS.  A clear alternative was to revert to the previous "Your Rate" method whereby a lender could set their "lowest acceptable" rate (YR), but benefitted if the actual selling rate was higher.

As to those of us who "got greedy" and "lost out", not so sir.  I am hacked off with now having to guess what the real "market rate" will be for the next day.  It certainly isn't the one RS use.  Today's MR is 5.8%, but I've sold money at 6.0%: too low - I could have had 6.2% with ease. At the weekend, I, like oldgrumpy, was in sight of 6.5%, but that guess failed. No problem, the money was withdrawn and is now invested on another P2P platform at an even higher rate.

Yeah, just drop the hesitation (er.....) voila Rate Set!   .