|
Post by lb on Apr 14, 2016 19:03:47 GMT
Cross-post with westonkev I was aware that this might happen, but assumed it was a fairly remote possibility historically and thought the risk was worth it. But I'm not convinced that's the case now, because of liquidity pressure as a result of the new ISA. OK, so basically I might end up lending for five years at 3-3.5% at recent rates. However, you haven't addressed my main point which is that the web site information on the rolling lending page does not say when you get your money back if there's no issue. ISTM that if there is no issue you get your money back when either a) your loans are repaid by the borrower b) you request a withdrawal (which is of course subject to new investors, rate premiums etc)
I was confused when james was differentiating between Zopa Access and RS Rolling - and perhaps I still have it wrong - but they both seem to me almost the same with the only real difference being that on RS all your funds could be in one loan whereas on Zopa your funds will be in multiple loans so in effect you have less chance of getting screwed unlucky on Zopa
|
|
james
Posts: 2,205
Likes: 955
|
Post by james on Apr 14, 2016 19:34:33 GMT
I was confused when james was differentiating between Zopa Access and RS Rolling - and perhaps I still have it wrong - but they both seem to me almost the same with the only real difference being that on RS all your funds could be in one loan whereas on Zopa your funds will be in multiple loans so in effect you have less chance of getting screwed unlucky on Zopa That's in part easy: I wrongly believed that RateSetter's Monthly product was a monthly term product and welcome the changed name and enhanced clarification about the underlying terms and risks involved. Assuming that is so, the RateSetter product will still probably beat the Zopa product due to the lower of interest rate risk in the RateSetter version. What RateSetter loses compared to my earlier wrong understanding is the guarantee of an exit at the end of a month term. So definitely a double take needed by me later and kudos to RateSetter for clarifying things. So after the double-take I now say: "RateSetter have now renamed their Monthly product to Rolling and made it more clear that the terms are not monthly but instead can be up to five years for the underlying investments. No fee for exiting but if no buyer is available at your lending rate your money might be locked in until the end of the terms of the underlying loans. Provided interest rates change slowly the RateSeter product seems like the winner in access terms but if there is a large rate shift there might be no way to get all of the money out, so in such adverse circumstances it might lock you in. in a corresponding situation with Zopa you'd take a capital loss instead of a lock in. Neither product appears suitable for those who want easy regular access to their funds or occasional access to the money because neither provides a cost free assured access to it."Provided you only expect slow rate changes the RateSetter product looks like the better deal between the two. Neither looks like a product I'd choose if I wanted regular or occasional access in the face of possible significant rate changes, there are better alternatives out there for that.
|
|
stevio
Member of DD Central
Posts: 2,065
Likes: 894
|
Post by stevio on Apr 14, 2016 19:35:46 GMT
Impressive. Where is this marvellous account alender? The best I've managed is 3% with Santander so I would be very happy indeed to find an additional provider at decent rates! alender points out he's got £48k in current accounts and rising and if he wants them he's probably still got plenty of options. With Mrs Oik I'm currently holding exactly £150k in current accounts paying from 3-5%. I've had them a while so you may not be able to open quite so many multiple accounts with some banks now. Look at Nationwide, Lloyds, TSB, BOS, Santander, Tesco... all pay between 3-5% and some pay decent cashback for opening an account. Nationwide pay £100 to both the new account holder and the account holder who introduces them. Halifax are happy to pay you a few quid a month even if you don't keep a penny with them. Plenty of suggestions from the helpful folk at MSE if you want them. That said, unless you aren't in a position to take any risk, then diversified investments in equities, property etc are likely to be a better option over the longer term. Maybe even a few quid in the likes of Ratesetter if you can stand the hassle. The the advantage of current accounts is they give you instant access to decent amounts of cash when opportunities arise and somewhere decent to park your profits. There are plenty of regular savers also still paying 3-5% such as Lloyds, TSB, Nationwide, Leeds etc. but obviously less flexible and more suited to simple saving. If anyone has put seriously money into Ratesetter before maxing out the better options then they're probably missing a trick. Well said
|
|
oik
Member of DD Central
Posts: 254
Likes: 349
|
Post by oik on Apr 14, 2016 19:43:02 GMT
We blogged, emailed and changed the web site to make this clearly obvious, and included the caveats about liquidity.... We prefer not to nanny state our generally financially sophisticated lenders, especially when a good thing happens. What's with all this blogging? I wasn't aware that to get 3.0% or so (less the gaps) I would need to regularly read someone's bloggs. As for the emails, I noticed several people were unaware of their invitation to the open-evening thing which I gather was in an email about something else. Was it hidden under that I wonder. Certainly makes us more appreciative of the way our banks communicate. Please assume that we don't mind being nannied if it prevents us wondering what the heck is going on. That some of your lenders don't even realise they can put something more than "chicken sh*t" into high interest bank current accounts suggests some are less financially sophisticated than you assume. Some possibly don't even understand what those mysterious "Borrowers offers" that Ratesetter list really are. If you intend Ratesetter to be suited only to the financially sophisticated then perhaps you should slap that across the landing page so we know. PS. I see there's something listed under notices called "Lender terms update" that refers us back to the terms. Is that the blog that was intended to make all clear? I see it's dated today with no time.
|
|
|
Post by lb on Apr 14, 2016 19:55:44 GMT
I was confused when james was differentiating between Zopa Access and RS Rolling - and perhaps I still have it wrong - but they both seem to me almost the same with the only real difference being that on RS all your funds could be in one loan whereas on Zopa your funds will be in multiple loans so in effect you have less chance of getting screwed unlucky on Zopa That's in part easy: I wrongly believed that RateSetter's Monthly product was a monthly term product and welcome the changed name and enhanced clarification about the underlying terms and risks involved. The only real clarification I need before I do a double-take in the earlier Zopa discussion is confirmation that there aren't any fees due to interest rate changes or changes of term between rolling and say five year underlying loan. Assuming that is so, the RateSetter product will still probably beat the Zopa product due to the lower of interest rate risk in the RateSetter version. What RateSetter loses compared to my earlier wrong understanding is the guarantee of an exit at the end of a month term. So definitely a double take needed by me later and kudos to RateSetter for clarifying things. I don't see how there is lower interest rate risk on RS. RS/Z both charge interest rate adjustments in fact RS keep our upside if rates are lower (I think)
like almost anything in life, we get what we pay for. higher rates are going to be higher risk even if we don't understand how or why. the big money going in does understand what's what and who's who and rates are where they are for good reason
|
|
james
Posts: 2,205
Likes: 955
|
Post by james on Apr 14, 2016 20:04:46 GMT
I don't see how there is lower interest rate risk on RS. RS/Z both charge interest rate adjustments in fact RS keep our upside if rates are lower (I think)
like almost anything in life, we get what we pay for. higher rates are going to be higher risk even if we don't understand how or why. the big money going in does understand what's what and who's who and rates are where they are for good reason
RateSetter says no fee for the product - or did - and the interest rate change and term change charges are fees. Instead they describe it as lock in, while with Zopa that rate change risk does seem to be borne by the lender. So the trade off seems to be lock in risk or capital loss risk after significant rate increases and unless I'm still getting something wrong the RateSetter product looks like the better of the two. I wouldn't really want to recommend either to someone who wants regular or occasional access due to the access or haircut risks. There's more interest rate margin to cover such risks in other places and some of those make six month term or shorter term loans available, as well as having a fair supply or secondary market loans with shorter terms than that available. Both are seeming to try to offer an easy access product at high volume without really having the underlying loans that can cover it. Though there's at least some potential to try to get loans close to the end of their term in resale markets to match the access target better. I don't know the extent to which either does this or how successful it is. Neither product is likely to start to fail to meet its target unless there is a rapid increase in interest rates or a broader liquidity issue. And in that relatively benign situation the RateSetter product looks like the winner of the two.
|
|
|
Post by misotu on Apr 14, 2016 21:40:40 GMT
That's in part easy: I wrongly believed that RateSetter's Monthly product was a monthly term product and welcome the changed name and enhanced clarification about the underlying terms and risks involved. Assuming that is so, the RateSetter product will still probably beat the Zopa product due to the lower of interest rate risk in the RateSetter version. What RateSetter loses compared to my earlier wrong understanding is the guarantee of an exit at the end of a month term. So definitely a double take needed by me later and kudos to RateSetter for clarifying things. So after the double-take I now say: "RateSetter have now renamed their Monthly product to Rolling and made it more clear that the terms are not monthly but instead can be up to five years for the underlying investments. No fee for exiting but if no buyer is available at your lending rate your money might be locked in until the end of the terms of the underlying loans. Provided interest rates change slowly the RateSeter product seems like the winner in access terms but if there is a large rate shift there might be no way to get all of the money out, so in such adverse circumstances it might lock you in. in a corresponding situation with Zopa you'd take a capital loss instead of a lock in. Neither product appears suitable for those who want easy regular access to their funds or occasional access to the money because neither provides a cost free assured access to it."Provided you only expect slow rate changes the RateSetter product looks like the better deal between the two. Neither looks like a product I'd choose if I wanted regular or occasional access in the face of possible significant rate changes, there are better alternatives out there for that. OK, well sign me up for the Financially Naive Collective, because with a product called "Monthly" and a significantly lower typical rate than the 1, 3 and 5 year products, I very much believed it to be, effectively, a monthly term product, with the proviso that the funds could only in fact be returned after a month *if* there were sufficient lender funds on offer, at that point and at a sufficient rate, to make it feasible. And that was fine, I've always thought the monthly product was very clever of RS. But now I'm perplexed. We have 1 year, 3 year and 5 year products. And we used to have monthly which apparently isn't monthly and has been renamed "rolling". Except that "rolling" isn't a length of time. So all I'm asking is how long I'm notionally committing my money for and when I can expect to see the capital, plus interest, arrive in my holding account subject to fund availability etc etc etc without me having to do anything. I assume it's still monthly. But it doesn't say so.All the information on the RS site about repayments and getting funds out refers to "the term you selected". All of it. But "rolling" is not a meaningful term so the information is now impossible to comprehend, whereas "monthly" was comprehensible. The no fee for withdrawals is key but I hadn't heard anything about that until I came to this board and it took a while for it to sink in because I was somewhat taken aback by the stealth renaming operation
|
|
ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 10,880
Likes: 11,104
|
Post by ilmoro on Apr 14, 2016 21:56:14 GMT
The no fee for withdrawals is key but I hadn't heard anything about that until I came to this board and it took a while for it to sink in because I was somewhat taken aback by the stealth renaming operation Funny, I have very little money in RS and thus pay little attention to the site or even their communications, but I was aware of the name change so i guess I read that email. Not as stealthy as they thought PS I didnt read the one about the drinks, but then it had already been posted here.
|
|
|
Post by misotu on Apr 14, 2016 21:59:00 GMT
Cross-post with westonkev I was aware that this might happen, but assumed it was a fairly remote possibility historically and thought the risk was worth it. But I'm not convinced that's the case now, because of liquidity pressure as a result of the new ISA. OK, so basically I might end up lending for five years at 3-3.5% at recent rates. However, you haven't addressed my main point which is that the web site information on the rolling lending page does not say when you get your money back if there's no issue. ISTM that if there is no issue you get your money back when either a) your loans are repaid by the borrower b) you request a withdrawal (which is of course subject to new investors, rate premiums etc)
I was confused when james was differentiating between Zopa Access and RS Rolling - and perhaps I still have it wrong - but they both seem to me almost the same with the only real difference being that on RS all your funds could be in one loan whereas on Zopa your funds will be in multiple loans so in effect you have less chance of getting screwed unlucky on Zopa
No, this isn't correct. You get your money back as follows: a) after a month (subject to lender funds availability etc) or if this fails b) when your loans are repaid by the borrower or c) when you request a withdrawal (which is of course subject to new investors, rate premiums etc). It currently works quite differently to Zopa Access. If I look at my portfolio the Rolling (formerly Monthly) contracts are all shown to be maturing 31 days (give or take weekends) after they began and also shown in my Repayments schedule. This is how it has always worked and according to the specific portfolio info (which is headed up "Your Rolling Money" so it should be current) this is how it still works. So this *is* a monthly term product, according to current RS account info, subject to certain conditions. What I don't understand is why this is not made clear to a lender checking out the "Rolling" lending pages. I can't see any mention of the term and clearly people here are understanding it quite differently. If it's just my old loans that have a 31-day (in March) term and RS propose to change this along the lines you describe then this would be a really fundamental change to the operation of the account. But if it's just the same Monthly product re-badged, why not make it clear that the funds will be returned to you in exactly one month, funds permitting? I agree with oik: more nannying please, RS!
|
|
|
Post by misotu on Apr 14, 2016 22:02:29 GMT
The no fee for withdrawals is key but I hadn't heard anything about that until I came to this board and it took a while for it to sink in because I was somewhat taken aback by the stealth renaming operation Funny, I have very little money in RS and thus pay little attention to the site or even their communications, but I was aware of the name change so i guess I read that email. Not as stealthy as they thought PS I didnt read the one about the drinks, but then it had already been posted here. What email? Neither I nor my husband received an email on the renaming thing so I guess you must be a Very Special Customer. PS They didn't invite us for drinks, either. Not that we're feeling picked on, you understand
|
|
james
Posts: 2,205
Likes: 955
|
Post by james on Apr 14, 2016 23:22:21 GMT
No, this isn't correct. You get your money back as follows: a) after a month (subject to lender funds availability etc) or if this fails b) when your loans are repaid by the borrower or c) when you request a withdrawal (which is of course subject to new investors, rate premiums etc). It currently works quite differently to Zopa Access. If I look at my portfolio the Rolling (formerly Monthly) contracts are all shown to be maturing 31 days (give or take weekends) after they began and also shown in my Repayments schedule. This is how it has always worked and according to the specific portfolio info (which is headed up "Your Rolling Money" so it should be current) this is how it still works. So this *is* a monthly term product, according to current RS account info, subject to certain conditions. What I don't understand is why this is not made clear to a lender checking out the "Rolling" lending pages. I can't see any mention of the term and clearly people here are understanding it quite differently. Perhaps there is some lack of clarity because RateSestter is describing it in one way for prospective customers: " Rolling market 2.9% Annualised rate Repaid upon withdrawal Loan terms: Your money will be invested in loan terms between 6 months and 5 years Earning: : This is a market where your loans are continually repaid and reinvested at the prevailing Rolling market rate. Your interest accrues for every day that your funds are on loan. Access: You can access your money freely as long as there are funds in the market to replace the amount being withdrawn. This could come from money already rolling in the market, new investors or funds set aside by RateSetter to cover peaks in demand. If replacement funds aren’t available, your money will be returned as and when your borrower(s) repay, along the loan terms of 6 months to 5 years. To date no customer has ever had to wait for their money although it's not a guarantee." But another way for current customers under Lend Money: " How it works:
Your money is lent for one month. At the end of the month, you can roll your contract over or you can withdraw your funds. Borrowers are re-matched in the market with new Lenders each month and enjoy a low-rate loan.
There are no early withdrawal fees for one month term investments.
If a borrower repays your loan early you will receive all of the outstanding capital and any interest earned up to that point. Funds will be reinvested as per your settings.
Best for:
Rolling is similar to a variable rate, easy access product. It's ideal if you want easy, regular access to your funds, or if you're trying lending for the first time." With RateSetter themselves apparently unable to provide a consistent description of how the product works I'm not surprised that there is misunderstanding about how the product works. I think that at this point I should sit back and wait for more clarity before doing a triple take. Lest I end up doing a quadruple take or quintuple...
|
|
alender
Member of DD Central
Posts: 957
Likes: 647
|
Post by alender on Apr 15, 2016 1:15:21 GMT
I have managed to get in excess of £48,000 and rising in 3% to 5% in a single name (no joint acounts) all protected by the FSCS, all not time limited and all can be accesed in a few minites to two hours via faster payments, you must be very rich if this is chicken sh*t. Impressive. Where is this marvellous account alender? The best I've managed is 3% with Santander so I would be very happy indeed to find an additional provider at decent rates! One Santander account, 3% for up to £20,000 (small fee but more than coved by cash back). One Lloyds account, 4% up to £5000. Three (3 allowed per individual) Bank of Scotland accounts, 3% for up to £5000 each. Two (2 allowed per individual) Tesco accounts, 3% for up to £3000 each. One TSB account, 5% up to £2000. This gives a total of £48,000 with a few small other perks. Most of the above accounts require funds deposited each month so I set up monthly Standing orders to send money through these accounts collecting the interest on the way out, once in place no more work required to ensure the interest. There are other accounts paying similar interest but end after one year also some monthly saving account with good interest. Oik seems to be the expert in this area.
|
|
jonah
Member of DD Central
Posts: 2,031
Likes: 1,113
|
Post by jonah on Apr 15, 2016 5:04:51 GMT
My money in 'rolling' lent yesterday has a return date next month. As does the loan lent on Monday. As does the cash lent on last Friday. All 31 ish days. I did have to change repayment to holding account, from market rate. The above three are my only loans in this market.... Similar logic to suggested as to why. It could be that I had previously tweaked the repayment setting some time ago, but I don't recall. Assuming that I didn't and market rate is the default then technically both of james text could be right. You get a monthly loan but then it gets reused and reused until you cancel.
|
|
|
Post by westonkevRS on Apr 15, 2016 6:52:26 GMT
Actually, re-reading the rolling market information, I have another question and I hope westonkev will have something to say on the matter. If I'm right in thinking that there may be a bit of a cashflow problem in the newly-named "Rolling" market when P2P ISAs arrive then I would like to be very clear about what will happen. I would have thought that the funds would remain on loan pending funds being available and that a repayment "queue" (effectively) would be formed which would gradually be dealt with as new money arrives. But the information seems to suggest that if there aren't sufficient funds then that's it ... you have to lend that money until the loan is repaid which might be 5 years! So just the one shot - and if the timing isn't right you're stuffed? Surely that can't be right. I can understand that there might be a delay. But I don't understand why someone lending in Rolling *after* me might get their funds out on time while I languish for up to five years. If that's the case then I'm first out the door and off to the BS until P2P ISAs appear. Clarification please? It does read like that, it's true. And I suppose that is to manage lenders expectations that in the worse scenario they would be locked in. But my understanding is that monies would be released across all rolling loans once sufficient liquidity has returned. If this happens in one block or piecemeal based on shortest term is clearly left to discretion within the terms above, but in reality hopefully common sense will prevail and rolling funds released. If RateSetter did tie in loans permanently, then the reputational impact would inevitably lead to the platform collapse through lack of new lender funds. So I'm sure they would prefer to revert to a new normal as soon as possible. Kevin.
|
|
ton27
Member of DD Central
Posts: 431
Likes: 267
|
Post by ton27 on Apr 15, 2016 8:53:08 GMT
I have been with RS from the beginning but this latest move will increase my rate of withdrawal. I was already running down my commitment due to the lack of opportunities to invest for 1 and 3years at decent rates. Indeed there is an increasing number of early 3 year repayments. I can only see the new "rolling" category further diminishing the 3 year returns so will continue to withdraw my funds.
|
|