oldgrumpy
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Post by oldgrumpy on Feb 19, 2014 20:20:54 GMT
My views are well documented. People don't need to read them again. I am glad Kev and Rhydian are discussing the matter. At this moment the most stupid example I have yet seen is on display. £143K is in the bottom offer at 5.7% 5 year. Some chancer is waiting to borrow at 5.2%. What is Ratesetter's "market rate" filled in for us? 5.6% No, 5.5% No, 5.4% No, 5.3% NO!!! (If I've broken rules by putting the image in, I will remove it). 5.2%
(Note: about 3 minutes after capturing that image, somebody wanted to borrow £25K at 5.6%. so the automated selected rate changed to 5.6%.)
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bugs4me
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Post by bugs4me on Feb 20, 2014 1:00:08 GMT
My views are well documented. People don't need to read them again. I am glad Kev and Rhydian are discussing the matter. At this moment the most stupid example I have yet seen is on display. £143K is in the bottom offer at 5.7% 5 year. Some chancer is waiting to borrow at 5.2%. What is Ratesetter's "market rate" filled in for us? 5.6% No, 5.5% No, 5.4% No, 5.3% NO!!! (If I've broken rules by putting the image in, I will remove it). 5.2%
(Note: about 3 minutes after capturing that image, somebody wanted to borrow £25K at 5.6%. so the automated selected rate changed to 5.6%.)
Well that is obviously (from a lenders perspective) just plain silly and yet another indication not to simply be a passive investor at RS ticking the reinvestment 'at market rates' box. RS have stated though this is going to be sorted to reflect a more sensible automated rate. Hopefully this will be sooner rather than later.
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pikestaff
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Post by pikestaff on Feb 20, 2014 8:55:29 GMT
Curse these bank/building society bonds which keep maturing, triggering 66.66% reductions in interest offered!! There's another one on March 3!! Me too. I got into p2p when I could no longer get 4% on long term deposits, even with fringe banks. I have a string of deposits due to mature in the next 18 months, which I will have to find a home for, and I don't want to manage everything actively. I would like to put a fair chunk of the maturing deposits into RS 5 yrs, which I think is the best "no effort" p2p product out there, but I do think the suggested rate mechanism will drive the rate down. I'm hoping that RS see sense on this.
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oldgrumpy
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Post by oldgrumpy on Feb 20, 2014 9:17:09 GMT
pikestaff...
'morning Pikey
Unfortunately, reinvesting payments on RS needs to be managed manually, or the rate achieved on 5 year is liable to be several points lower than the optimum. As soon as multiple monthly payments start rolling in on different days of the month, choosing at what rate to re-offer and even whether to delay a few days, or even dump in "one month" temporarily, needs to be done. Then all those little reinvestments trigger new repayments on more dates , needing management .... and so on. I do have the time, and it can be done quite quickly, but at least twice a week, in my opinion. I've got a big lump of Cheltenham and Gloucester 3 yr "stepped" bond, in which they offered 4.75% in the third year...just started its third year, so by next January all those pre-silly rate bonds will have run their time.
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markr
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Post by markr on Feb 20, 2014 9:44:39 GMT
I agree with oldgrumpy, RS does need a bit of management if you aren't going to lose out on a few tenths of a percent. Using the monthly market as a buffer to hold funds during troughs in the 5 year rate is a good idea given the speed (or lack of) that funds can be transferred in, but it does need (ideally) daily visits to re-lend returned capital.
Winner of the "Most Boring P2P Product (Where Boring Is Good)" surely has to be Wellesley's 5 year capital market. Log in, lend, 5 years later log in again and collect your money!
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oldgrumpy
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Post by oldgrumpy on Feb 20, 2014 9:47:54 GMT
I like boring! (Even boring the readers of this forum has its attractions ) One or two more boring options from established P2P/P2B would be welcomed.
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pikestaff
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Post by pikestaff on Feb 20, 2014 9:58:08 GMT
I am content to let RS reinvest for me even if I do lose out on a couple of tenths. I'm not yet convinced by Wellesley's proposition but am keeping an eye on it. What I really want is a properly thought out, and liquid, pooled investment vehicle that is not property based. I'm hoping TC might get their act together some time this year...
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oldgrumpy
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Post by oldgrumpy on Feb 20, 2014 10:32:30 GMT
I am content to let RS reinvest for me even if I do lose out on a couple of tenths. I'm not yet convinced by Wellesley's proposition but am keeping an eye on it. What I really want is a properly thought out, and liquid, pooled investment vehicle that is not property based. I'm hoping TC might get their act together some time this year... Actually, an interesting question has occurred to me, for Kevin (or Rhydian). In my 5.2% example shown above, if I were switched on to reinvesting my repayments at "market rate" while I deal with my fruit ration, at what rate would I be placed in the queue, 5.2% or 5.6% or 5.7%? I could live with 5.6% or 5.7% if I were on holiday when this happens, but NOT 5.2%.
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pikestaff
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Post by pikestaff on Feb 20, 2014 13:33:49 GMT
That is worrying me too.
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bugs4me
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Post by bugs4me on Feb 20, 2014 13:41:06 GMT
Earlier the populated rate was 5.2% - a full 0.4% the lowest on offer but it did match what was being requested from a borrower. Then it jumped to 5.6% - 0.1% what was on offer but that matched what was being requested by a borrower. I have my reinvest set at 6.0% so it's not going to be sucked into 'market rate' whatever definition is being given to that. Then I just go on and change the 6.0% to whatever. Passive 'market rate' reinvestors beware.
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pikestaff
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Post by pikestaff on Feb 20, 2014 14:26:43 GMT
The FAQ on Market Rate says:
"The Market Rate is automatically calculated in each market every day. The rate is set at the level of the Lowest Lender Order, after discounting a small percentage of all the offers. This is done to ensure that the Market Rate is not adversely affected by outlying orders..."
I have always taken this to mean that reinvestment is at the lowest "sensible" rate; perhaps I am wrong.
My worry with the new system is that the percentage of lenders accepting stupidly low suggested rates will be high enough that they become the Market Rate, hence driving the return down for passive reinvestors especially.
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oldgrumpy
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Post by oldgrumpy on Feb 20, 2014 15:23:10 GMT
"The rate is set at the level of the Lowest Lender Order, after discounting a small percentage of all the offers...This is done to ensure that the Market Rate is not adversely affected by outlying orders..."
Well that is exactly what has been happening, unless market rate is NOT what is being placed on the "my selected" box, which is always 0.1% below the lowest lending order and up to 0. 5% below it if a borrower happens to make a low requirement. I await an answer. Is the rate being placed in the box market rate or is it not. If it is, then the principles outlined above (which a year ago when I first read it I accepted as fair and reasonable) are NOT being followed. If it is no t, then I suggest that market rate as defined above (and on the RS site) should be the figure placed in the box. Then people can alter as they wish but no-one risks being matched several points below the going offer. When automatic reinvestment at market rate is applied to all accounts set for that each day in the morning, which figure is currently being applied? At 15:30 we have this. Very occasionally someone refuses a loan and money is returned to my holding account in the middle of a day. What "market" rate would I get if I were set up for automatic reinvestment? In this scenario I now consider 5.7% to be market rate but would I get 5.2%? (edit: Note at 16:06 I logged back in and found my small chunk at 5.7% put in yesterday afternoon had been matched - but the suggested rate STILL showed 5.2%!)
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Post by davee39 on Feb 20, 2014 16:05:42 GMT
My worry with the new system is that the percentage of lenders accepting stupidly low suggested rates will be high enough that they become the Market Rate, hence driving the return down for passive reinvestors especially. RS is a MARKET so lenders can quite rightly set any stupid rate they like, and borrowers can ask for any rate they like (Look at complaints about another place where this no longer happens!). If there was a successful lender conspiracy to drive rates up to 6% (facebook, twitter?) the borrowers would fall away, lenders would get fed up and rates would fall. I log in daily to see if I have at least £10 to re-invest and keep updated on the markets. I think its all very clear - actively manage for the best rates, invest passively for slightly lower but still excellent rates (4.9% Rate Promise -(Terms and conditions apply) anyone?).
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oldgrumpy
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Post by oldgrumpy on Feb 20, 2014 16:43:06 GMT
"RS is a MARKET so lenders can quite rightly set any stupid rate they like,..."
Quite so!
But I need reassurance that RS itself is not actually allocating stupid rates under the guise of "market rate".
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bugs4me
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Post by bugs4me on Feb 20, 2014 17:17:50 GMT
"RS is a MARKET so lenders can quite rightly set any stupid rate they like,..."
Quite so!
But I need reassurance that RS itself is not actually allocating stupid rates under the guise of "market rate".
The populated rate is now 5.2% simply because a borrower requires a loan at ----- 5.2%. There's no logic to this especially as the lowest lending offer is at 5.6%!!!
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