locutus
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Post by locutus on Aug 8, 2016 6:24:07 GMT
<snip> The market no longer seems fair. <snip> I suggest you read a bit more about how RS works. Only in the very loosest sense could it be classed as a marketplace. On one side, you have thousands of lenders (sellers) and on the other, you have RS as a sole borrower (buyer). Lenders and RS obviously don't compete on equal terms or have access to the same information and as a result you get the type of distortion you're witnessing. A true and fair market would allow lenders to be matched with borrowers directly, with RS only facilitating. That is not the case and as a result, claims of market manipulation will probably plague the platform for the forseeable. In fact, RS's shareholders expect the company to borrow from us as cheaply as possible whilst lending to borrowers at rates that are as high as possible but still commercially viable. It is not a conspiracy theory to suggest that they are attempting to do this by whatever legitimate means they can. Whether we would consider them legitimate is a different conversation. Lending monthly money for up to 5 years and using provision fund money to fund the very loans that you are supposed to be insuring against is certainly pushing the boundaries. Result is more market distortion.
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Post by westonkevRS on Aug 8, 2016 6:24:53 GMT
Surely the 5 year market rate should be set by the investors actually lending in the 5 year market It is, only loans made with 5-year money impact the 5-year Market Rate. The only impact of rolling money being used on longer term loans is that it could reduce the demand on that market, but it does not influence it be used within the Market Rate calculation. But as an aside, hardly any (near negligible) amount of rolling money is used over the weekends in longer term loans. Although this could change. The 5.4% Market Rate today is because 5.4% us the average rate taken on Sunday by lenders in the 4-5 year loans. And as no reinvestment is placed I to the market at weekend, this is 100% manually placed real lender 5-year lender money.You might not agree with the acceptance of this rate (below forum members targets usually above 6% AER), but others are. With loans available on the comparison sits of 3.2%, it is difficult to source good quality low risk customers with rates at 6% AER (noting we have to take a fee, pay the broker and contribute to the Provision Fund on top). Lower borrower volumes and more lenders chasing yield (thanks to the banks stinginess) causes the rates to drop. Don't rage against the algorithm.... Kevin.
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Post by graham34 on Aug 8, 2016 7:49:04 GMT
What comes round goes round. I still have a number of loans from the middle of 2013 with lender rates from 5% to 5.5% in the "5 year" market. 6% and above wasn't consistent until spring 2014.
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oldgrumpy
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Post by oldgrumpy on Aug 8, 2016 8:02:44 GMT
Well, as expected, today's MR is 5.4%, and a few folks wanted to lend first, so offered 5.3%, so a quick (naïve?) £1000 went in at 5.1% (bonus grabber? ). Perfect for RS following the first coffee after 9am to offer 4.9%; for a while we may fall from there. That's the game, folks - just play the "waiting game variant". Grumpy? Moi? PS 'morning Kev
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Post by westonkevRS on Aug 8, 2016 8:38:18 GMT
Morning. I think rates did go up post 2014 as RateSetter was more successful at finding borrowers than lenders. This increase on market demand raised rates. Existing lenders lapped up the higher rates, it that didn't mkae it the new normal.
The last 12 months have not seen such explosive growth in borrower demand. Whereas there is now £620m in lender balances that provide a large level of reinvestment income on the supply side of the markets. In addition, RateSetter now is finding more lenders. As an example last week alone saw £7.7m on new money and 386 New lender activations. We are not your dirty high yielding secret, alas.
The markets are relatively efficient depending on the ebbs and flows of borrower and lender demand. Thus could go either way over the next 12 months, but the last 4 years have swung between 5.0% and 6.4% for 5-year money. Who knows where it'll swing toward in the future....
Kevin.
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alender
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Post by alender on Aug 8, 2016 8:52:24 GMT
Some of the other means to reduce rates are the use of short term funds to finance longer term loans, bonus offers to new customers which allow small amounts to be placed at low rate (boosted by the bonus) , change to the MR lending . Also if rates get too high a special offer comes along which crashes rates for weeks.
As Oldgrumpy has found the desire for RS to reduce rates has lead them to create an automated algorithm to keep placing borrowers offers below the lowest lender offer, as has been seen for a few small lenders offers you can take % points off the Lend it Now Rate.
Some say these are all conspiracy theories and RS does all of this for other reasons, but add all of the evidence together and for me it is obvious the RS are doing all they can to reduce rates. With all this going on I cannot understand RS’s claim it does not affect the MR rate. Also calling this a market is dubious at best; it is what RS decides to give and is not decided by market forces.
I will not place any money with RS at these low rates and the issues around the PF. I have gone elsewhere for short term money and getting 4% -4.25% with PFs. As things settle down after Brexit will also be looking elsewhere for longer term funds, BM looking interesting.
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Post by Deleted on Aug 8, 2016 9:09:41 GMT
As I suspected, the lower rates were signalling a BoE cut. Such is the Wisdom of Crowds.
I don't mind accepting high 5s. There might be a few 6s now and again but with the BoE tempted with NIRP it would be silly to wish for such high rates.
Besides, with the Zopa 5-year below 5% there must be a lot of riskier borrowers on RateSetter.
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Post by p2plender on Aug 8, 2016 9:42:18 GMT
@zerohedge
Germany Sells EU2.135Bn in 6 Month Bills; Yield -0.6192%
Now just be thankful RS are not charging us to lend our dosh. It's a tough ol world for income seekers.
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Post by dualinvestor on Aug 8, 2016 13:52:21 GMT
Fare ye well Ratesetter, but you won't be doing it with my money . Not while the system algorythm can do nothing but produce rates of 5.4%
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spiral
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Post by spiral on Aug 8, 2016 15:07:41 GMT
Some say these are all conspiracy theories and RS does all of this for other reasons, but add all of the evidence together and for me it is obvious the RS are doing all they can to reduce rates. With all this going on I cannot understand RS’s claim it does not affect the MR rate. Also calling this a market is dubious at best; it is what RS decides to give and is not decided by market forces. You forgot the other biggy. Not including the overnight matches in MR calculation which is when the best rates seem to get matched.
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oldgrumpy
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Post by oldgrumpy on Aug 8, 2016 15:27:05 GMT
Quite so. Very often a big build up of "borrower offers" occurs during the day*, at several points below the realistic available lender offer money, then it is matched with existing lender offer money after 10pm overnight, and the next day's repayments are placed at the new market rate, which doesn't include the overnight higher rate matches; these don't contribute to any Market Rate calculation, which is thus manipulated placed as low as possible.
*This frequently amounts to a substantial six figure sum.
As I've always said, never accept market rate. Spend two minutes a day setting your own realistic greedy optimistic rate, and be prepared to wait a few days sometimes. I think it probably makes as much as 0.5% difference over time.
We have the choice.
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Post by moneymagnet on Aug 8, 2016 17:10:57 GMT
As I've always said, never accept market rate. Spend two minutes a day setting your own realistic greedy optimistic rate, and be prepared to wait a few days sometimes. I think it probably makes as much as 0.5% difference over time. We have the choice. I agree. In my rather short experience with RS, the rate seems to fluctuate significantly over the course of a week. I NEVER accept market rate because I know I can wait a couple days to match a few tenths of a percent higher. I also have a bottom line that I will not go below. If money has been sitting around for too long at my minimum rate, I just pull it and put it on another platform.
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pikestaff
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Post by pikestaff on Aug 9, 2016 22:59:18 GMT
Unsurprisingly the rate cut and press coverage thereof, which has included more than a few mentions of p2p, has driven up the flow of new money to the platform. Rates will go down, as surely as night follows day. I will not be surprised if 5% becomes the new normal, as it was when I started lending on RS in 2013. Time will tell.
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oldgrumpy
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Post by oldgrumpy on Aug 10, 2016 6:13:20 GMT
Quite so. Very often a big build up of "borrower offers" occurs during the day*, at several points below the realistic available lender offer money, then it is matched with existing lender offer money after 10pm overnight, and the next day's repayments are placed at the new market rate, which doesn't include the overnight higher rate matches; these don't contribute to any Market Rate calculation, which is thus manipulated placed as low as possible. *This frequently amounts to a substantial six figure sum. As I've always said, never accept market rate. Spend two minutes a day setting your own realistic greedy optimistic rate, and be prepared to wait a few days sometimes. I think it probably makes as much as 0.5% difference over time. We have the choice. This was done today with the result that today's market rate was set at 5.1% and all the repayment funds placed at that rate were immediately lent out to yesterday's backlog of borrowers, which was then cleared in bulk at real lenders' offer rates of up to 5.8%. (but wouldn't have to be included in Market Rate setting for any day). Nice procedure .... for borrowers (except that haven't the rates those borrowers will pay already been agreed with RS before the loans are offered to lenders?). £360K not included in Market Rate calculations. Now I wonder why RS doesn't clear that before the 10pm deadline. Edit: A Kevin says above, the market rate (5.1%) was based on what was accepted by lenders yesterday before 10pm. It's just that RS was not prepared to accept what lenders were offering at that time to clear the outstanding backlog for the day. Edit: Come to think of it, I came across from Zopa because of poor rates (They were "projecting" 4.5% but giving me 3.8% over a protracted period). Currently they offer 4.3% ish on "classic", so RS five year is still well ahead of that even at just over 5%.
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Post by Deleted on Aug 12, 2016 10:23:43 GMT
With Western countries heading towards NIRP the days of 6% on RateSetter are over.
Our current accounts will probably have negative interest rates soon enough so anything more than that is a bonus.
The establishment wants us to gamble our money away and into their pockets.
You know how to vote. The LibLabCon-trick has had its day.
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