Reinvestment "floor"

Well, precisely. And it's the "but" that I'm kvetching about. There ought to be a way of reinvesting at what is advertised as "market rate" (i.e. floating) but with a lender-defined lower limit.

I suspect that might have been the original intention of the "floor" facility, but it wasn't coded right. As it is now, it doesn't really make any sense at all.

Well yes, of course I've chosen the "Your Rate" option. How else do I specify a permanent floor, while allowing for market fluctuations to come into play above that figure? That's what the tin tells me to do. I can't enter a value in "Your Rate" and also leave "Market" ticked.


Sorry, Kevin, but I'm here to tell you it is true. It's not me who set the rate to 13% (I chose a "Your Rate" of 10%), it's the fact that the reinvestment got offered at 13% because that was the market rate at the time it was first offered.


I have actually raised this in the past by email with Customer Services, and the answer boiled down to "That's the way it is, buddy -- suck on it" (only infinitely more elegantly and courteously phrased, of course).

Obviously, I can't recreate the situation at will, because it depends on external factors over which I have no control. I'll try to increase the likelihood of a recurrence by watching the "volume" stats, etc, and PM you as soon as it happens.

And look. If (when?) it turns out that I'm wrong, and you're prepared to swear that the system hasn't been recoded in the meanwhile, I promise that I will debase myself and grovel publicly in the most abject and self-loathing manner that I can possibly summon.

I never take sides. But my money's on Kev....  I hope universal understanding and love is restored, whether i am right or wrong.  

Warn and pikestaff are right. Once your money has been added to the back of a queue at a certain rate, it stays in that queue at that rate. Orders once placed do not get their rates adjusted later.

The official blurb fails to make the distinction between queuing and lending, but it's a crucial distinction, because money queued doesn't always get lent - and the auto system is supposed to get the money lent, without requiring personal supervision and intervention.  

Point is, if your money gets queued during a rate spike, it's quite likely that rates will drift down again before it gets from the back of the queue to the front, with the result that it then doesn't get lent until the next spike, if then.

I've got a 3-year floor at 4.5%. At this moment I've got money in the 4.7% queue, a long long way back, put there by the auto-relender early this morning, when that was the going rate. There's also a borrower offering at 4.6%. So far as I'm concerned, my money could now be matched to that borrower.  But it won't be.  Tonight's money might be (though actually I suspect not), but last night's money that's queued at 4.7% will now wait for 4.7% even if 4.7% never happens again.  This isn't auto-relending at market rate.

Actually, the floor is irrelevant here.  Obviously too high a floor could prevent my repayments getting re-lent, but that's not the problem.  The same problem can arise without a floor.

I wouldn't call it a coding error though. It would need a more complex mechanism to do it better.  Money offered at market rate really needs to track market rate on an ongoing basis until it gets lent, maintaining queue position against money offered later at market rate.  (As things stand, money offered at market rate later, when market rate is lower, may get lent first.)

Well as it happens my money queued at 4.7% did go out at 4.7% soon enough, so it wouldn't have been to my advantage to take the offered 4.6%. But that was auto-gambling.

What was at least as likely is that rates would have slipped straight back down below 4.5%.   Then, even if my money had been requeued at my 4.5% floor the following night as per your suggestion, it would have missed the only boat and could then be marooned for weeks.

But at least your way would work if no floor is set, where the present system doesn't.

What I think I want though is for queue position to be favoured over interest, rather than passing up an available opportunity to lend in favour of hanging on for an extra 0.1% that might not be achieved.

What I think this means is that "market rate" would need to be calculated per-lender whenever matching is done or potentially done, i.e. a request filled or queued, and would be the highest rate that would actually get the lender into the loan.  If that's below my floor, I'll wait, but if it's at or above, I'll take it.

 

westonkevRS - By the way, Kevin, I now have screenshots which demonstrate the behaviour I'm whingeing about, if the guys round the water-cooler still don't believe it. Let me know if you need them.