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Post by westonkevRS on Feb 18, 2014 13:51:11 GMT
Myself and Rhydian have been discussing the posts on this and other P2P forum sites regarding a recently introduced systems change to pre-populated the suggested lending rate.
We wanted to pre-populate the rate to make people’s lives easier and get people’s money lent quickly. It's always a trade between speed of lending and maximising the lender returns, and we went for speed.
There are often quite low "best lender" offers by lenders that clearly want their money lent on the next available loan; however it is fair to say that although most lenders want speed they also want to lend at or near the market rate (or are prepared to wait hoping to get more....). Frankly the easiest for the system was just to put it in 0.1% below the "best lender" offer – but we hear what you are saying and we will take a look. Perhaps this was not the best benchmark. We cannot commit to a time-frame here; but be sure that I'll feedback on this forum.
For the avoidance of doubt; money automatically re-lent is at the market rate.
Being able to set your own rates is key to the RateSetter market, as is our focus on always trying to make the experience simple and intuitive for all our customers.
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oldgrumpy
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Post by oldgrumpy on Feb 18, 2014 14:01:58 GMT
So, earlier today there was about £25K on offer at 5.6%. Nothing below that. Is that the market rate? The box was filled in as 5.4% because there was a borrower wanting to pay 5.4%. is that the market rate? And if someone wanted to borrow at 5.3%, would the box be repopulated with 5.3% for that reason, despite the fact that money on offer was still bottoming out at 5.6%, would 5.3% then be the market rate?
What exactly IS the market rate? Borrowers' or Lenders' rates?
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pikestaff
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Post by pikestaff on Feb 18, 2014 17:00:34 GMT
It seems to me that the present "suggested rate" is designed to drive the rate down. To be neutral the "suggested rate" should follow the market, not make it. Perhaps an algorithm based on a moving weighted average of actual matches would do the trick.
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duck
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Post by duck on Feb 18, 2014 18:33:12 GMT
I'm failing to get animated on this subject. Ratesetter has to be the easiest site to lend on with only a modicum of common sense. IMHO the pre-population is not needed but if it is there I will ignore it and set the rates that I want/expect to achieve. I agree that the current population method might encourage rates to fall if lenders don't use that modicum of common sense.
Looking at the 'cash' that is offered at rates above those that will be achieved perhaps suggests (current company obviously excepted) I expect too much from fellow lenders ......
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markr
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Post by markr on Feb 18, 2014 19:07:49 GMT
It's too early to say whether the auto fill has reduced rates, but 5.7% seems harder to achieve now than it was!
My beef with it is that it is selling new or naive investors short. We know, for example, that on the 5 year market it is better to wait several days to get 0.1% better rate, so by knocking 0.1% off to get an instant match is a false economy unless you believe rates are on a permanent decline. The users most likely to just accept the suggested rate are new or less experienced investors who won't realise this. I have seen single lumps of up to £10000 on the "lowest rung", these people are blindly accepting worse rates as well as delaying matches for those of us sat waiting at higher rates.
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Post by pepperpot on Feb 18, 2014 19:13:08 GMT
I actually quite like the pre-population as it saves at least 2 seconds of my valuable time by having to type in a rate, just a couple (or 5) clicks higher and bob's your uncle.
Maybe what is actually getting people's backs up is the wording of - 'At my selected rate of' in combination with pre-populating it at a lower rate than most would select. Possibly change the rate to the same as the lowest offer as a fairer starting point, or change the wording to simply - 'Selected rate of'. And maybe increase the 'presence' of the Higher/Quicker buttons to make them more prominent, as the colouring makes them less potent than the rest of the text in the 'set your rate' box.
edit: although looking at the 5yr market now - £227k at 5.7, nothing at 5.6, pre-poputalting the field at 5.6 doesn't seem too unfair.
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Post by pepperpot on Feb 18, 2014 19:17:42 GMT
What exactly IS the market rate? Borrowers' or Lenders' rates? Isn't the market rate the point at which both sides meet?
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mikeb
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Post by mikeb on Feb 18, 2014 19:32:05 GMT
Perhaps an algorithm .... Wash your mouth out with a bar of Zopaholic soap, and don't use such language around here Some of us are still sensitive to TGLAs ...
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oldgrumpy
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Post by oldgrumpy on Feb 18, 2014 21:22:04 GMT
Re the RS reminder emails: There is £380K on offer at 5.8% or above (5 yr) and much of that will have been languishing for a long time. I think it is a good thing that RS reminds them after a week or so that their rate may be too high, but having done that, I have no regard for those people's non-earning funds. That is their lookout. Zopa have taken the route that it wasn't fair that those people's funds weren't being lent out so have ended up penalising everybody with enforced "Safeguard" (at the same time thrusting rates right down because lenders lost their right to set the rates). I don't want RS to spoil their operation which (overall) I think is a simple and good one.
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mikes1531
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Post by mikes1531 on Feb 19, 2014 17:07:25 GMT
Possibly change the rate to the same as the lowest offer as a fairer starting point... edit: although looking at the 5yr market now - £227k at 5.7, nothing at 5.6, pre-poputalting the field at 5.6 doesn't seem too unfair. If there's a lot of money sitting at the lowest point, then pre-populating 0.1% below that might be reasonable. But if there's very little, then suggesting that lenders ought to undercut that seems unnecessary and unreasonable. Perhaps the answer is to pre-populate at a level that's within £XXX of the bottom, where £XXX is an amount of lending typically made in a day or less. That would stop small low offers from pushing the pre-populated rate downwards.
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angrysaveruk
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Post by angrysaveruk on Feb 19, 2014 17:13:39 GMT
I think the easiest way would be to look at how much is at the current rate. So say the current rate is 5.6% then you would only put an automatic bid on at 5.5% if say there is already over say £60,000 placed at 5.6, if it is less than £60,000 on offer at that rate then put it at the current rate. This would avoid the problem of continually bidding downwards as more and more auto reinvestments come on the market. This could still push down rates if there was alot more money coming onto the market and not that many loans going out, but you could argue that is just supply and demand in action.
The other issue is people putting in small chunks of money below the market rate. You could just ignore layers which have small amounts on offer messing up the system.
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mikes1531
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Post by mikes1531 on Feb 19, 2014 17:23:26 GMT
I think the easiest way would be to look at how much is at the current rate. So say the current rate is 5.6% then you would only put an automatic bid on at 5.5% if say there is already over say £60,000 placed at 5.6, if it is less than £40,000 on offer at that rate then put it at the current rate. This would avoid the problem of continually bidding downwards as more and more auto reinvestments come on the market. This could still push down rates if there was alot more money coming onto the market and not that many loans going out, but you could argue that is just supply and demand in action. The other issue is "crazy" people putting in small chunks of money below the market rate. You could just ignore layers which have small amounts on offer messing up the system. That's what I was trying to describe, but I didn't want to suggest actual amounts because I'm not familiar enough with RS to know what would be appropriate.
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oldgrumpy
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Post by oldgrumpy on Feb 19, 2014 17:39:00 GMT
Good ideas, gentlemen. I might even stop moaning if something similar is adopted. Having said that I have just transferred £**** into RS in anticipation of 5.8% -ish by Friday. Curse these bank/building society bonds which keep maturing, triggering 66.66% reductions in interest offered!! There's another one on March 3!!
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angrysaveruk
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Post by angrysaveruk on Feb 19, 2014 18:31:25 GMT
I think the easiest way would be to look at how much is at the current rate. So say the current rate is 5.6% then you would only put an automatic bid on at 5.5% if say there is already over say £60,000 placed at 5.6, if it is less than £60,000 on offer at that rate then put it at the current rate. This would avoid the problem of continually bidding downwards as more and more auto reinvestments come on the market. This could still push down rates if there was alot more money coming onto the market and not that many loans going out, but you could argue that is just supply and demand in action. The other issue is "crazy" people putting in small chunks of money below the market rate. You could just ignore layers which have small amounts on offer messing up the system. That's what I was trying to describe, but I didn't want to suggest actual amounts because I'm not familiar enough with RS to know what would be appropriate. Well the size of the layers was an example I think the size of the layers should be fairly large so people dont get undercut continually by new money. There are quite a few tradeoffs there, but I think something along those lines could work, especially if there are not any massive spikes in supply. I am sure there is a much more clever way of doing it but it would be a simple solution that might work in practice.
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mikeb
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Post by mikeb on Feb 19, 2014 18:55:26 GMT
If there's a lot of money sitting at the lowest point, then pre-populating 0.1% below that might be reasonable. But if there's very little, then suggesting that lenders ought to undercut that seems unnecessary and unreasonable This is the way to go, if you must suggest a pre-populated figure. (Not keen on that) This morning there was something silly like £160 at 5.3 and I was "suggested" to try 5.2 ... If I had, the next mug, er, lender along would have been suggested 5.1, and so on down. 5.7 was achievable today.
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