kaya
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Post by kaya on Nov 8, 2016 12:09:24 GMT
With P2P lending, there is no Govt. compensation scheme. Provision funds are not a guarantee. Arguably, lender risk is presently increasing - yet rates achievable are dropping. Both RS & Zopa have been quick to follow the leads of the banks, with the continuing - and even further lowering - of a base-rate kept artificially low. So is it still worth it? Do the achievable P2P rates here and elsewhere really reflect the risk involved? Is it still worth it, and are lenders being conditioned to accept ever-lower rates?
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gnasher
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Post by gnasher on Nov 8, 2016 12:32:20 GMT
I think that is a question that only you can answer as we all have our own risk/reward investment criteria and financial circumstances. Nobody else has any idea what yours are.
For myself I have the same % of my capital in p2p as I had 2 years ago and I am happy with that, but there is no reason why my criteria should in any way influence yours.
If you are convinced that there is "manipulation" - that old chestnut - then I suggest you find another home for your money that you are happy with. Let us know if you find something better.
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duck
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Post by duck on Nov 8, 2016 14:44:48 GMT
As a valued customer and an 'Advanced' one at that my bank wrote to me yesterday to say that due to market conditions they were having to lower interest rates to me ......but luckily for me, being an Advanced Customer I would still be entitled to 0.05% ...... just as long as I kept £50K invested I'm out of P2P ............
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adrianc
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Post by adrianc on Nov 8, 2016 15:02:52 GMT
Both RS & Zopa have been quick to follow the leads of the banks, with the continuing - and even further lowering - of a base-rate kept artificially low. I don't use Z, but RS don't set their rates. If the rates drop, then it's solely because the balance of supply and demand has changed, moving the rate. They have dropped slightly - as a quick glance at the historic chart will tell you. members.ratesetter.com/ratesetter_info/rate_trends.aspxMy own 5yr market average has dropped from 6.4% to 6.3%. Looking back at the detail, it looks like the lowest rates were mid September and early October. Most of the last year, the trend has been around 6.0%, it's been more volatile since early August, but the peaks show that the trend rate since then (about 5.3%) doesn't have to be accepted blithely. Even the graph doesn't show the full situation - it shows a high mark of 5.8% at the start of October, yet I've had 5.9% and 6.0% matches since then. Unless you're going for the "conspiracy theory" approach? It's been raised a few times in the past... as often for RS pushing rates up as down...
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Post by Icarus Unleashed on Nov 8, 2016 16:41:29 GMT
With P2P lending, there is no Govt. compensation scheme. Provision funds are not a guarantee. Arguably, lender risk is presently increasing - yet rates achievable are dropping. Both RS & Zopa have been quick to follow the leads of the banks, with the continuing - and even further lowering - of a base-rate kept artificially low. So is it still worth it? Do the achievable P2P rates here and elsewhere really reflect the risk involved? Is it still worth it, and are lenders being conditioned to accept ever-lower rates? Even government compensation schemes are not unlimited (either they are explicitly capped, such as the UK Financial Services Compensation Scheme limit of £75k per institution, or such compensation schemes are capped by economic reality - e.g. promises to guarantee all banking system deposits would most likely turn out to be largely empty if ever called upon). If the cost of money (interest rates) is falling across the financial system and Z and RS are competing to attract borrowers in that financial system then the rates that they charge to borrowers will be dragged down also. The comment about the base rate being 'artificially low' is an interesting one. I've often thought that we refer to a 'financial system' instead of financial markets because so many aspects of the system are manipulated (etc. interest rates, taxes etc...) I don't think it's immediately obvious what the level of base rates should be (the answer would depend on what central banks hoped to achieve). Although we can look to the past to gain clues about the effects that different base rates have previously produced such a survey would not immediately provide an answer to the question of what level of base rates should be used in future. "is it still worth it?" - I think that it is still possible to make a return through P2P. It's down to each individual to decide whether that return is sufficient for them to stay in the P2P game. Do the achievable P2P rates here and elsewhere really reflect the risk involved? Incredibly difficult to answer. I think that risks in the sector are increasing and that this increase in risk is not necessarily being reflected by an increase in achievable P2P rates. However, given that risk can be seen as relative and the risks in sectors other than P2P also appears to be increasing, it is possible to argue that the risk/return ratio of P2P does reflect the risks involved when looking at the risk/return ratios of other potential investments. "are lenders being conditioned to accept ever-lower rates?" I suspect that the fall in rates at most P2P platforms largely reflects the supply / demand profiles of each platform rather than a deliberate plan to lower the rates paid to lenders. We now live in a low rates world so unless the central banks decide to pull a handbrake turn as far as monetary policy is concerned we had better get used to it - low rates are here to stay it seems.
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Investboy
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Trying to recover from P2P revolution
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Post by Investboy on Nov 8, 2016 16:43:07 GMT
You can pretty sure say the same thing of any asset class - that is being manipulated
Central banks manipulate interest rates that has direct effect on bond market and lowering yields
That props up shares as investors are looking for better yields
That props housing markets as mortgages are stuuuupiiiid cheap
That boosts P2P as "more spohisticated" investors looking for better yield
Commodities, oil, gold being manipulated too
The reality is we mere mortals live in manipulated world and have to learn to live with it and invest accordingly. Diversification is the key.
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kaya
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Post by kaya on Nov 9, 2016 10:47:18 GMT
Are rates manipulated? I think it no coincidence that as Zopa announce a fall in rates, so the 'market' rates here fall also. I would imagine that RS advise borrowers as to what rate should be achievable. I did not know, adrianc ,that 6% was still achievable for lenders. How long would it typically take to get a match to get that now?
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Post by Financial Thing on Nov 9, 2016 13:38:42 GMT
Are rates manipulated? I think it no coincidence that as Zopa announce a fall in rates, so the 'market' rates here fall also. I would imagine that RS advise borrowers as to what rate should be achievable. I did not know, adrianc ,that 6% was still achievable for lenders. How long would it typically take to get a match to get that now? I haven't gotten 6% rates in about 2 weeks but 6% could be offered in 1 minute or in 6 months. Personally I don't think we'll see 6% again for a while. Because the system operates the way it operates, there's just no way to tell.
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ashtondav
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Post by ashtondav on Nov 9, 2016 18:25:52 GMT
I'll wait for the january surge. If I don't hit 5.8% in the end jan peaks its withdrawn and goes into ZOPA+
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Post by Harland Kearney on Nov 10, 2016 1:35:04 GMT
The current 1 year lending rate of 3.1% isn't my cup of tea, that is paying 0.1 percent more than my FSCS Backed TSB account (cutting from 5 percent to 3 percent in January). I think AC and ZOPA offer better service around this rate (AC's QAA/30DAA in particular)
For diversification and somebody who wants very little in the area of management sure, but it just isn't worth lending in for that rate in my opinion.
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Post by geoffrey on Nov 13, 2016 10:31:09 GMT
Have to agree. The majority of my cash is going to AC at the moment, where 7% is achievable with their equivalent of the provision fund, albeit with the risk of it taking quite a long time to get cash back from defaulting borrowers. I'm just reinvesting repayments and interest on RS, while I evaluate other sources to diversify into.
RS have patently manipulated the market down whenever they can: the most notorious being the listing of the highest "borrower" (i.e. RateSetter aggregate) request as the "rate to lend right now", and making the achievable "market rate" difficult to discover for users who don't know about it. That is manipulation by any definition of the word, and it leads to absurd rates being listed under some market conditions. The other method of manipulation is the injection of capital into the markets on the (few) occasions when there is a capital "drought" -- and I understand and see the need for this kind of market manipulation which can be understood as maintenance of liquidity. I suspect, but cannot prove, that it is a lot more regular than just maintenance of liquidity and that capital is injected whenever the rate goes over 6%, or whatever upper threshold has been set. Of course RS have a responsibility to ensure that rates do not go above a level which is likely to produce defaults that would drain the Provision Fund faster than it is replenished with new lending. I just wish they'd be clear, honest, and up-front about this. Overall I would say that RS has a "mixed" model between fixed rate (Zopa) and a true market (are there any P2P left that operate a completely "free" market model?).
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upland
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Post by upland on Nov 13, 2016 11:29:29 GMT
Me too. Rates can be daft , lending for 5 years at very low rates is not good. If you use specify fixed market interest rate it seems to be spending so long below it that the 'rolling' product is compromised. I have been moving out.
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teddy
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Post by teddy on Nov 13, 2016 14:30:31 GMT
Have to agree. The majority of my cash is going to AC at the moment, where 7% is achievable with their equivalent of the provision fund, albeit with the risk of it taking quite a long time to get cash back from defaulting borrowers. Geoffrey, can I ask how regular your interest and capital payments are on the 7% GBBA? Are you getting what you expect when you expect it?
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Post by geoffrey on Nov 13, 2016 16:28:16 GMT
Geoffrey, can I ask how regular your interest and capital payments are on the 7% GBBA? Are you getting what you expect when you expect it? It's a bit hard to monitor, but I seem to get some interest payments nearly every day, and quite often principal payments too. I've done a rule-of-thumb calculation over the last two months, and my Assetz balance has expanded by the equivalent of 5.4% (annual equivalent, not calculated with a compounding formula). Now for some of that time I had a fair amount hanging around in the QAA at 3.75% waiting for investment, and only recently has the full balance been invested at the advertised 7%. Additionally, I've been adding money throughout this period. Too many variables for me to be bothered working out, but it feels "about right". Sorry this isn't very satisfactory. But if you've followed the comments of their chief technical officer, you'll know that he's calculated interest payments down to the last quadrillionth of a penny (or something infinitesimally small that I don't really care about...).
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Post by dualinvestor on Nov 15, 2016 14:42:35 GMT
Well today the 5 year rate is 4.0% and £1million on offer to lend at 5.0% or below.
Is that still worth it? I know my answer.
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