alender
Member of DD Central
Posts: 957
Likes: 647
|
Post by alender on Sept 30, 2016 20:55:59 GMT
There is a fairly widely held belief that RS are [manipulating the market] / [using algorithms] that lower rates to the detriment of lenders.... But those lenders don't seem to think that the same algorithms are being used when the rates go up, like today back to 6% AER..... Or did we turn them off? I do not think anyone is saying that the algorithms are used prevent rates from rising but help to keep them lower than they would be if it was a market in the true sense of the word however as I said before without the RS features that keep pressure on the rates who knows where the rates would be given the increased demand for loans. Also as I said before it would be good to have an explanation of why these many features that help to reduce rates are there otherwise we can only assume that is the purpose, a good start would be to explain why RS keeps placing borrowers orders just below the lowest lender rate especially when the rate is very low.
|
|
starfished
Member of DD Central
Posts: 296
Likes: 216
|
Post by starfished on Sept 30, 2016 22:21:52 GMT
But those lenders don't seem to think that the same algorithms are being used when the rates go up, like today back to 6% AER..... Or did we turn them off? I do not think anyone is saying that the algorithms are used prevent rates from rising but help to keep them lower than they would be if it was a market in the true sense of the word however as I said before without the RS features that keep pressure on the rates who knows where the rates would be given the increased demand for loans. Also as I said before it would be good to have an explanation of why these many features that help to reduce rates are there otherwise we can only assume that is the purpose, a good start would be to explain why RS keeps placing borrowers orders just below the lowest lender rate especially when the rate is very low. But they have explained in the past their motivation, it is just that many don't seem to like the reason stated, my understanding was that many features are there to make the process appear very simple and easy to Lenders (e.g. invest and go). It is a separate debate whether RS (or any other P2P for that matter) is really as simple as they appear or should appear simple. Put another way, there is no such thing as a free lunch...
|
|
alender
Member of DD Central
Posts: 957
Likes: 647
|
Post by alender on Sept 30, 2016 23:01:20 GMT
I have not seen any explanation for the many features that help reduce the rates, I will be most interested if you can tell me what RS reasoning is for these features (except the obvious one to reduce rates), we can start with the one I mentioned which why RS always put borrowers offers below the lowest lenders offers.
|
|
|
Post by jackpease on Oct 1, 2016 4:57:26 GMT
And no I'm not customer facing, and never have been. And in truth, the more image conscious would probably prefer that I didn't post. Kevin. My level of funding with various platforms depends on interest rates - but my ceiling depends on trust. The amount actually have in RS may be declining due to recent rate drops - but my ceiling is four times other platforms primarily because you post as a human being and not some corporate image-conscious robot. We get loads of warm words on other platforms but many of them appear so immune to taking offence at tiresome postings that I discount their credibility. Jack P
|
|
|
Post by westonkevRS on Oct 1, 2016 9:37:43 GMT
Congrats on that then Kevin. Was there anything different done this week such as a new channel partner to suggest this might be a nice trend? Not that impacted the 5-year market, so there wasn't anything specific other than continued growth. But the later end of the month usually puts upward pressure as reinvestment are lower than at the start of the month and new money dries because people haven't been paid yet! Rates usually peak day 21 of the month. If anything we've been closing high risk sources of business, continue to go back up the risk curve (unlike some of our competitors). Although the downside of this has been less money being paid into the Provision Fund the last three months, in the expectations that future calls will be lower. Next week will probably see downward pressure as its a weekend combined with the start if the month for repayments. We are also expecting the start of a repayment of a largish business loan. Kevin.
|
|
adrianc
Member of DD Central
Posts: 9,011
Likes: 4,822
|
Post by adrianc on Oct 3, 2016 6:51:31 GMT
Oof! 3.1% across the board this morning - except the 1yr, at 2.9%...
|
|
jonah
Member of DD Central
Posts: 2,031
Likes: 1,113
|
Post by jonah on Oct 3, 2016 7:51:06 GMT
Over 6m of offers in rolling... and nothing anywhere else.
|
|
|
Post by closetotheedge on Oct 3, 2016 8:22:13 GMT
I said " I think people are not fools, especially with money" And no I'm not customer facing, and never have been. And in truth, the more image conscious would probably prefer that I didn't post. Kevin. I quite often disagree with some of the things you say, but I respect that you (figuratively) stand up here and say them. I think most of the resentment is aimed at "The Man" rather than you personally, but as you have the chutzpah to be the "face" of RS to this forum, you get the brunt of it. Your tone sometimes seems a little sharp, and occasionally a little condescending, but I guess that is just your way. There is a fairly widely held belief that RS are [manipulating the market] / [using algorithms] that lower rates to the detriment of lenders. While that is perceived to be continuing, there will be negative comments aimed at RS via you; but I believe that the vast majority of people do not mean them personally. However, if you personally have done something to really annoy somebody, then that is a different matter I have very often been a fool and usually it is with money. A degree of calling a spade a spade is healthy and should be welcomed. If you simply want a customer rep to lick your backside then just hang out in Waitrose.
|
|
|
Post by propman on Oct 3, 2016 8:30:28 GMT
I have not seen any explanation for the many features that help reduce the rates, I will be most interested if you can tell me what RS reasoning is for these features (except the obvious one to reduce rates), we can start with the one I mentioned which why RS always put borrowers offers below the lowest lenders offers. IIRC Kev has sai that the borrower offers represent loans through non-RS channels (introducers) where they have to agree the rate upfront and so they cannot float with the volatile RS offers. These are placed below the lowest lender offer to "create a market" in the same way that market makers will offer shares for sale at a bit less than people are offering their shares for sale to provide the option of an "instant" sale now rather than risking waiting and being undercut by others. Many complain even from short periods of their money not earning, so this is the only way to ensure that their money can be loaned instantly! I agree that a floor would be sensible, but one has not been introduced (other than 0%).
I believe Kev also confirmed that when rates are very low, they take greater fees. BUt they presumably have also taken losses when there has been an increase ion the market that means that they have to pay lenders a higher proportion of the income than they had intended, so this is just redressing the balance. I think Kev also defended it as helping to reduce volatility. In the early days, RS saw significant increases in demand when rates dropped, much of which was then offered at higher rates as lender funds ran short. I expect that the FCA might have not liked what, with the potential for reduced credit if the borrowers then shopped around, might be seen as misleading borrowers. I expect that this was why they now offer most offers on application rather than when accepted.
- PM
|
|
|
Post by westonkevRS on Oct 3, 2016 11:59:42 GMT
Oof! 3.1% across the board this morning - except the 1yr, at 2.9%... Ouch, yes. I think the Market Rate was set at 5.1%. A number if lenders went in at 5.0% AER (which is typical for the morning) and then others chased it down to 4%. It then looks like 6 lenders with low-ball "lend it now offers" were accepted as far low as 3.1%. I've said here before, all customers see the rate and confirm before setting their lending offer. This seems a little low and I have raised it internally. I'm a little uncomfortable that even just a small number of customers that still chose these rates are locked in for up to 5-years. I don't know what the answer will be. There will not be an appetite for more warnings or tech restrictions. But we should be able to contact and educate. Kevin.
|
|
alender
Member of DD Central
Posts: 957
Likes: 647
|
Post by alender on Oct 3, 2016 12:28:24 GMT
IIRC Kev has sai that the borrower offers represent loans through non-RS channels (introducers) where they have to agree the rate upfront and so they cannot float with the volatile RS offers. These are placed below the lowest lender offer to "create a market" in the same way that market makers will offer shares for sale at a bit less than people are offering their shares for sale to provide the option of an "instant" sale now rather than risking waiting and being undercut by others. Many complain even from short periods of their money not earning, so this is the only way to ensure that their money can be loaned instantly! I agree that a floor would be sensible, but one has not been introduced (other than 0%).
Thanks for the info, not sure I really understand what is going on. If the borrowers offers from non-RS channels have the rate already agreed why is it placed below the lowest lender offers not at the agreed rate less fees etc. in the stock market analogy this would be akin to limit order. However IMHO it does not explain the automated system which runs during and outside of normal business hours placing these in small amounts and when fulfilled by the lend it now money the next set of lend it now money is at the new lower lending rate only to have the next set of borrowers offers place at an even lower rate. While this is an interesting explanation from Kev it does not fit the way borrowers offers are placed otherwise there would need to be borrowers offers from non-RS channels agreeing and getting loans approved (subject to funds) 24/7. Sometimes the most obvious explanation is correct. I thought that all money that RS lends is at an agreed rate (not floating) to the borrower not one set by the borrower the same way that lenders set their rate and then RS place this on the so called market at whatever rate they chose, is this not the case? Also it looks as though RS place all lenders offers on the so called market when they are made but drip feed all the borrowers offers when it suits them, otherwise why do these appear 24/7. This gives the impression to lenders of a lot of money available waiting for a borrower to encourage lenders to compete with each other for lower rate.
|
|
|
Post by propman on Oct 3, 2016 14:28:07 GMT
IIRC Kev has sai that the borrower offers represent loans through non-RS channels (introducers) where they have to agree the rate upfront and so they cannot float with the volatile RS offers. These are placed below the lowest lender offer to "create a market" in the same way that market makers will offer shares for sale at a bit less than people are offering their shares for sale to provide the option of an "instant" sale now rather than risking waiting and being undercut by others. Many complain even from short periods of their money not earning, so this is the only way to ensure that their money can be loaned instantly! I agree that a floor would be sensible, but one has not been introduced (other than 0%).
Thanks for the info, not sure I really understand what is going on. If the borrowers offers from non-RS channels have the rate already agreed why is it placed below the lowest lender offers not at the agreed rate less fees etc. in the stock market analogy this would be akin to limit order. However IMHO it does not explain the automated system which runs during and outside of normal business hours placing these in small amounts and when fulfilled by the lend it now money the next set of lend it now money is at the new lower lending rate only to have the next set of borrowers offers place at an even lower rate. While this is an interesting explanation from Kev it does not fit the way borrowers offers are placed otherwise there would need to be borrowers offers from non-RS channels agreeing and getting loans approved (subject to funds) 24/7. Sometimes the most obvious explanation is correct. I thought that all money that RS lends is at an agreed rate (not floating) to the borrower not one set by the borrower the same way that lenders set their rate and then RS place this on the so called market at whatever rate they chose, is this not the case? Also it looks as though RS place all lenders offers on the so called market when they are made but drip feed all the borrowers offers when it suits them, otherwise why do these appear 24/7. This gives the impression to lenders of a lot of money available waiting for a borrower to encourage lenders to compete with each other for lower rate. I do not know how these offers are placed 24/7. It is possible that some are automated and given on-line.
I believe a small amount of the borrower offers are genuine counter-offers from borrowers offered a rate by RS that they find unacceptable. These are at a fixed rate. However, loans brokered by others are (I believe) at an agreed rate that RS have agreed to honour. Yes these could be converted into a net rate, but this would not solve the problem if they were less than the rates lenders would accept. In these circumstances RS would be stuck with them until it could unload them. As a result, it seems that RS get the lowest rates they can and the fees are whatever is left. While they might lose on some, they will do better on others so that fees are acceptable overall. I assume that the reason for the fixed rates is that is the only basis that the introducers will transact at. The alternative would require them to revert back to borrowers when the rate achievable was determined.
- PM
|
|
alender
Member of DD Central
Posts: 957
Likes: 647
|
Post by alender on Oct 3, 2016 18:29:46 GMT
Thanks for the detailed answer, fills in a bit more of my knowledge gap on how RS really works.
|
|
adrianc
Member of DD Central
Posts: 9,011
Likes: 4,822
|
Post by adrianc on Oct 3, 2016 19:15:43 GMT
Oof! 3.1% across the board this morning - except the 1yr, at 2.9%... Yet by the end of the same day, a 5.8% placemarker placed this morning has been matched... My head hurts.
|
|
spiral
Member of DD Central
Posts: 909
Likes: 456
|
Post by spiral on Oct 4, 2016 7:26:36 GMT
Rhydian Lewis, Founder and Chief Executive Officer
".........He is also passionate about markets and hopes that the rates set by investors on RateSetter will one day come to be seen as reference rates."
Not anytime soon I'm guessing.
|
|