jnm21
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Post by jnm21 on Aug 9, 2016 20:55:41 GMT
I think a simple "IMPORTANT: 3 year market to close to new (re)investment from October" email would have sufficed quite nicely.
While the options used have got the message out, they have annoyed some (I have not used the 3 yr market, but still raised a eyebrow at the lack of a specific email).
There will be others out there still to hear & some of them will be annoyed to hear 'second hand' via forums, etc.
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jnm21
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Post by jnm21 on Aug 20, 2016 22:03:09 GMT
If I was to invest in the 3 year market now (currently attractive at a last matched rate of 4.5%), come November what would happen if I wanted to sell it?
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Post by propman on Aug 30, 2016 12:02:52 GMT
If I was to invest in the 3 year market now (currently attractive at a last matched rate of 4.5%), come November what would happen if I wanted to sell it? Not certain, but I would assume that it would be saleable. RS would just sell to the Rolling market!
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sl75
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Post by sl75 on Sept 26, 2016 13:07:28 GMT
Just realised the "real" reason for RS retiring the 3 year market ...
It means that the next-shortest market compared to the 5 year market will be the 1 year market, so they can hike up the sell-out fees even more 3 years later, as they can justify claiming an even larger difference between the "rate you got" and the "rate you would have got" when there's no 3 year market to compare it to.
They'll presumably still continue to (unfairly IMHO) amplify this difference by claiming it not only for the amount being sold out, but for all interest ever received on the entire contract (a huge additional amplification factor after 3-4 years when most of the loan has been repaid), and to (also unfairly IMHO) attempt to hide the huge fees from those who re-invested their repayments by not breaking down the overall total so that you think you're being charged (say) a 5% fee overall (might not seem bad if you're fairly desparate for the money), rather than the reality of (e.g.) 1% fee for 80% of the loans and a 21% fee for the last 20% (which itself might have been an 11% fee for the penultimate 10%, and a 31% fee for the final 10%.... the latter which was probably going to get repaid in a few months anyway, so you'd be better off using your overdraft, or even a "payday lender"!)
(RateSetter are free to prove me wrong by revising the method of calculating sell-out fees to be something that doesn't appear designed to claw back huge amounts from the unsuspecting - the removal of the 3 year term giving no "near" comparison for a mature 5 year loan gives the ideal opportunity for them to do so).
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adrianc
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Post by adrianc on Sept 26, 2016 18:30:42 GMT
Just realised the "real" reason for RS retiring the 3 year market ... It means that the next-shortest market compared to the 5 year market will be the 1 year market, so they can hike up the sell-out fees even more 3 years later, as they can justify claiming an even larger difference between the "rate you got" and the "rate you would have got" when there's no 3 year market to compare it to. Given that the rolling, 1yr and 3yr are all within spitting distance of each other (3.2/3.5/3.7) at the moment, that looks even more like a conspiracy theory than most of the fixing allegations usually do...
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sl75
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Post by sl75 on Sept 27, 2016 7:09:45 GMT
Just realised the "real" reason for RS retiring the 3 year market ... It means that the next-shortest market compared to the 5 year market will be the 1 year market, so they can hike up the sell-out fees even more 3 years later, as they can justify claiming an even larger difference between the "rate you got" and the "rate you would have got" when there's no 3 year market to compare it to. Given that the rolling, 1yr and 3yr are all within spitting distance of each other (3.2/3.5/3.7) at the moment, that looks even more like a conspiracy theory than most of the fixing allegations usually do... As I say, RateSetter are free to prove me wrong by NOT using that as the basis for their calculation... figuring out a system that DOESN'T act as a price-gouging mechanism for those who have no choice but to liquidate. In any case, the closeness of the rates is a short-term artefact, that appears in part to have been caused by the announcement of the closure of the market - 3-year lenders who might normally wait until next month to get money lent out in the 3 year market are instead forced to choose between a lower rate than they'd hoped for, or not lending their money out at all. For most of the history prior to the decision to close it, the 3 year rate has been about evenly spaced between the 1 and 5 year rates.
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jonah
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Post by jonah on Sept 27, 2016 7:29:41 GMT
Given that lenders will likely either put cash in 5 year or withdraw, I think the real winner here could be 1 year. I assume RS will end up using it for more of the 2,3,4 year loans so demand will increase slightly pushing rates up.
I would guess that a 3%, 4%, 5%, average may becoming for the remaining offers, until ISA comes along and reduces them all by 1%.
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alender
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Post by alender on Sept 27, 2016 8:50:42 GMT
Just realised the "real" reason for RS retiring the 3 year market ... It means that the next-shortest market compared to the 5 year market will be the 1 year market, so they can hike up the sell-out fees even more 3 years later, as they can justify claiming an even larger difference between the "rate you got" and the "rate you would have got" when there's no 3 year market to compare it to. I think one of the main reasons to get rid of the 3 year market is RS will now finance these loans from the 1 year and rolling market where traditionally the interest paid is quite a bit less so it will increase RS profits. I do not like the 1 year market as interest is paid at term so is delayed until the next tax year giving a bumpy income curve which does not help my tax planning.
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Post by westonkevRS on Sept 27, 2016 12:40:37 GMT
Perhaps the answer is just a lot more simple, in that the 3-year market is not especially popular with either lenders or borrowers, and removing it makes the product offering simpler for (new) lenders and makes the IT processing slightly less complex.
But still, this isn't as much fun as other theories....
Kevin
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alender
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Post by alender on Sept 27, 2016 13:35:28 GMT
Perhaps there other reasons for getting rid of the 3 year market but it is very convenient for RS for lenders who would have liked a 3 year product taking out a 5 year product and having to pay not insignificant fees to RS if they need to get out early or going into short term products and getting less interest.
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wapping35
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Post by wapping35 on Sept 27, 2016 14:02:33 GMT
Just a question on the 3yr market ending.
Does this mean that 5 year lending will now include loans from 2-5 years ? At the moment I know the 5 year market includes 4 year loans , hence my question.
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Post by westonkevRS on Sept 27, 2016 17:45:21 GMT
Just a question on the 3yr market ending. Does this mean that 5 year lending will now include loans from 2-5 years ? At the moment I know the 5 year market includes 4 year loans , hence my question. The 3-year loans will be funded by the rolling market. This does have the commercial benefit of providing cheaper cost of funds so we can win more better quality borrowers on lower APRs, but does introduce more liquidity and interest rate risk that we continue to manage Kevin.
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Post by propman on Sept 28, 2016 8:38:23 GMT
Just realised the "real" reason for RS retiring the 3 year market ... It means that the next-shortest market compared to the 5 year market will be the 1 year market, so they can hike up the sell-out fees even more 3 years later, as they can justify claiming an even larger difference between the "rate you got" and the "rate you would have got" when there's no 3 year market to compare it to. I think one of the main reasons to get rid of the 3 year market is RS will now finance these loans from the 1 year and rolling market where traditionally the interest paid is quite a bit less so it will increase RS profits. I do not like the 1 year market as interest is paid at term so is delayed until the next tax year giving a bumpy income curve which does not help my tax planning. 3 year market rates have been in terminal decline ever since the new MR methodology was introduced. Far from being unpopular with lenders, there have been an excess of lenders over borrowers that often means MR money is not fully lent on the day it goes on the market. Infact the 30 day loans has risen by about 50% over the last couple of months (presumably from the low rates).
As for the above, 3 year MR has been below 1 year for much of this time, so I don't subscribe to the conspiracy theory. More worryingly, 1 year lending has increased in the last few weeks and cleared much of the back-log of offers lying idle in rolling market. As a result, discontinuing the 3 year market might increase the rate for 3 year borrowers. In addition, as RS take the risk on increasing rates, either they need to add a significant premium to further reduce the competitiveness of these loans, or they will increase platform risk.
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Post by propman on Sept 30, 2016 7:51:43 GMT
Please rgive the double post. I note that RS is now holding the MR at 3.7% in 3 year market that is higher than any recent matches. There is also a mismatch of the relatively high amount of loans written for 3 years and the low number of matches. This suggests that RS is now funding most loans from the rolling market. What happened to the assurance that RS would close open offers and transfer the money to holding accounts?
- PM
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Post by westonkevRS on Sept 30, 2016 17:36:21 GMT
Please rgive the double post. I note that RS is now holding the MR at 3.7% in 3 year market that is higher than any recent matches. There is also a mismatch of the relatively high amount of loans written for 3 years and the low number of matches. This suggests that RS is now funding most loans from the rolling market. What happened to the assurance that RS would close open offers and transfer the money to holding accounts?
- PM New money settings cannot use the three year market, it's greyed out. Some reinvestments with an existing 3-year setting is still going into this market. But shortly this will be force changed to holding. The limited number of customers using this market they'll be contacted personally. But I'm not on this project, so if you have any questions or grievances you know who to call..... Kevin.
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