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Post by robinshould on Sept 27, 2015 16:32:05 GMT
From all that has been said before on this forum, September is usually a good month for lenders with high borrower demand, and around the 25th of the month is the best of all. Interestingly the last 5 days have seen very good borrower demand in the pipeline for the 5 year market, and shortage of lender money. However, the lenders have been holding out for 6.5% and above, and the borrowers have declined the offer. There have only been some £65k of loans made in the last 24 hours in the 5 year, and not much more in the previous 24 hours. Perhaps the borrowers are getting smarter because in the past I have seen such a situation run up to the 6.8/6.9% mark quickly.
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mikeb
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Post by mikeb on Sept 27, 2015 19:22:20 GMT
If only there was a way to match up the striking RS borrowers with the (possible) striking lenders at FC as of next week! Interplatform deal?
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Post by westonkevRS on Sept 28, 2015 6:08:00 GMT
Borrowers can obviously tempt lenders by trying to demand a lower rate, and seeing if a lender bites. Hence the offers in the market. But approved borrowers are not offered a higher rate at which lenders are providing, and tempted to only get the money at the higher rate. The market doesn't include such lender offers. Borrowers see the APR available from their Smart Quote. If the quote is too high they simply won't apply for the loan, if they do apply then RateSetter will approve them at that APR. We don't say "approved, but you need to accept a higher offer". The smart quote is effectively saying "you are invited to apply, not yet approved, but the APR will be x" The market is effective because if lenders stay to high, we cannot attract full applications and the lending volume drops until lenders drop their rates and RateSetter becomes competitive in the loan market. Which incidentally is a lender benefit when another lender offers their money at a low rate (don't blame the "new display", lenders have many reasons for their informed choices). This allows a blended competitive APR with one savvy lender getting a higher return than might otherwise be possible. westonkevRS
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Post by robinshould on Sept 28, 2015 9:09:49 GMT
Thanks Kev, that's interesting. So when we see spikes in the 5 year market, it is more likely to be caused by ratesetter 'back office' blending 5 year expensive money with cheaper money from elsewhere to give the borrower the loan at the APR set previously. Not having been a borrower I did not realise they had no flexibility to borrow at a higher rate once the full application had been approved at a particular APR. Does Ratesetter ringfence money being lent on the respective markets to loans of the same duration on that market? I note at the present time the majority of money is concentrated at 6.7% on the 5 year market and is not moving. Presumably this is only going to get lent if either it is 'blended' with cheaper money, or the borrowers smartquote APR is increased to reflect the higher lender offer.
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jonbvn
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Post by jonbvn on Sept 28, 2015 10:10:45 GMT
lenders have many reasons for their informed choices Given the way the 5-year rate has dropped off a cliff this morning, one really has to question how "informed" their choices really are. Far from it for me to use such terms as "short-sighted", "naive" or "blinkered"
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Investor
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Post by Investor on Sept 28, 2015 12:54:21 GMT
Would suggest that anyone with English as a second language might believe informed and enforced were actually the same word #justsaying
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Post by westonkevRS on Sept 28, 2015 19:49:10 GMT
Thanks Kev, that's interesting. So when we see spikes in the 5 year market, it is more likely to be caused by ratesetter 'back office' blending 5 year expensive money with cheaper money from elsewhere to give the borrower the loan at the APR set previously. Sorry, that isn't what I meant. We don't blend across terms, i.e. we don't blend shorter term money with 5- year money. I meant if a savvy lender is only willing to lend at 7%, and we need 6% blended to be competitive to find a borrower, then if a "lend it now" type lender gives at 5% the RateSetter can match a loan. Everyone is happy, especially the savvy lender. The APR is fixed with the money on the market at that time. Any short term movement is a gain or loss to RateSetter, but this is minimal as most borrowers complete within 24 hours. westonkevRS
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Post by westonkevRS on Sept 28, 2015 19:52:32 GMT
I note at the present time the majority of money is concentrated at 6.7% on the 5 year market and is not moving. Presumably this is only going to get lent if either it is 'blended' with cheaper money, or the borrowers smartquote APR is increased to reflect the higher lender offer. Yep, 6.7% on 5-year money makes us uncompetitive in the prime lending markets (say with comparison web sites or loan brokers). So we find it hard to find a prime borrower who could get a better deal elshwhere. Hence we cannot match loans unless lenders lower the rates. That's the markets in action...
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arbster
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Post by arbster on Sept 28, 2015 19:58:49 GMT
Thanks Kev, that's interesting. So when we see spikes in the 5 year market, it is more likely to be caused by ratesetter 'back office' blending 5 year expensive money with cheaper money from elsewhere to give the borrower the loan at the APR set previously. Sorry, that isn't what I meant. We don't blend across terms, i.e. we don't blend shorter term money with 5- year money. I meant if a savvy lender is only willing to lend at 7%, and we need 6% blended to be competitive to find a borrower, then if a "lend it now" type lender gives at 5% the RateSetter can match a loan. Everyone is happy, especially the savvy lender. The APR is fixed with the money on the market at that time. Any short term movement is a gain or loss to RateSetter, but this is minimal as most borrowers complete within 24 hours. westonkevRSThis is why I've been bemused by the moral outrage expressed on this forum about the changes that may have resulted in non-expert lenders getting a few tens of BPs worse than they would if they were more on the ball. Those BPs are thus made available to the very same experts to secure their 6.9% on the 5-year market. It would be like the flippers on FC complaining that they let people Autobid 6.0% for 60mo A+ loans that others were getting 10%+ on.
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Post by westonkevRS on Sept 29, 2015 5:33:07 GMT
I'm an auto-bidder on Funding Circle... Doh! Just haven't got the time or energy to manage the small amount of lending I do over there. Probably very true for some lenders on RateSetter. It takes all sorts.
Kevin.
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adrianc
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Post by adrianc on Sept 29, 2015 6:58:17 GMT
I'm an auto-bidder on Funding Circle... Doh! <points and laughs at the auto-biddie>
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pom
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Post by pom on Sept 29, 2015 7:20:55 GMT
I'm an auto-bidder on Funding Circle... Doh! Just haven't got the time or energy to manage the small amount of lending I do over there. Probably very true for some lenders on RateSetter. It takes all sorts. Kevin. Yeah there's probably a really strong correlation between autobid/market rate users....just not on this forum, which probably explains a lot of the differences of opinion over the recent RS changes!
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c88dnf
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Post by c88dnf on Sept 29, 2015 10:13:08 GMT
Returning to the original post topic, borrower offering 6.6% this morning which I was gracious enough to accept. All heart, me.
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oldgrumpy
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Post by oldgrumpy on Sept 29, 2015 11:32:37 GMT
Returning to the original post topic, borrower offering 6.6% this morning which I was gracious enough to accept. All heart, me. Good job you didn't accept "Market Rate" which was set at 5.8%, though I suspect many of those were sucked into that big 6.6%(business?) loan so may not have lost out.
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c88dnf
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Post by c88dnf on Sept 29, 2015 13:49:13 GMT
Returning to the original post topic, borrower offering 6.6% this morning which I was gracious enough to accept. All heart, me. Good job you didn't accept "Market Rate" which was set at 5.8%, though I suspect many of those were sucked into that big 6.6%(business?) loan so may not have lost out. Accept Market Rate! Oh, I haven't laughed so much for ages. It's the way you tell 'em oldgrumpy - or have you been on those "special" bananas again?
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