ceejay
Posts: 971
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Post by ceejay on May 27, 2017 8:40:20 GMT
As I write, there is £1.7M available at 2.0% on the one year market. I've been in Ratesetter for a couple of years now, happily taking around 4% at one year, but have been watching the rates dive in recent months to a level which makes no sense to me at all.
I'm currently executing two different strategies - one to leave some in the rolling market for a little while to see if rates pick up, and the other to shift out to other markets (Assetz is my current destination).
But the real question is, how long can this insanity continue?
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mary
Member of DD Central
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Post by mary on May 27, 2017 8:46:31 GMT
Yesterday afternoon there was over £20m on offer across all 3 markets with £200k of demand from borrowers.
Simple economics of supply vs demand says rates probably will go lower still until this gets back into balance.
I'm removing everything as it matures over to other platforms.
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Post by gidoppp01 on May 27, 2017 9:09:56 GMT
RateSetter and Zopa are directly competing against high st banks and at the moment the rate for borrowers are low.
Banks pay little interests on account deposits and they have many other ways to generate income, like insurance, credit card, overdraft charges, monthly fees.
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Post by WestonKevTMP on May 27, 2017 10:19:26 GMT
Simple economics of supply vs demand says rates probably will go lower still until this gets back into balance. Exactly. RateSetter lending volumes reduced considerably in April to ~£40m, from ~£60m the month before. Although these numbers are clouded by some refinancing in March and a seasonal low in April. And I suspect May will also be a reduced month of lending. So with this imbalance, the rates can only be pushed down. They are a market after all, and with ~£700m in outstanding balances paying back ~£40m per month, after this is reinvested there isn't anywhere for new money to go. I also think RateSetter will get FCA approved before end of June '17, with the IF ISA by end of summer. And that will also push down rates. I understand from another P2P platform that their ISA income has not only been this year's cash allowances, but many people transferring their previous years - sums of £100k plus.... Its gonna get tough for lenders that want safe P2P returns... Kevin.
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Post by gidoppp01 on May 27, 2017 10:55:39 GMT
Exactly. RateSetter lending volumes reduced considerably in April to ~£40m, from ~£60m the month before. Although these numbers are clouded by some refinancing in March and a seasonal low in April. And I suspect May will also be a reduced month of lending. So with this imbalance, the rates can only be pushed down. They are a market after all, and with ~£700m in outstanding balances paying back ~£40m per month, after this is reinvested there isn't anywhere for new money to go. I also think RateSetter will get FCA approved before end of June '17, with the IF ISA by end of summer. And that will also push down rates. I understand from another P2P platform that their ISA income has not only been this year's cash allowances, but many people transferring their previous years - sums of £100k plus.... Its gonna get tough for lenders that want safe P2P returns... Kevin. I agree it has something to do with supply and demand. However, checking RateSetter rate trend, you will find out the volume matched and rates. March 2017: £67m matched April 2017: £47m matched May 2017(on going): £46m matched so far There's no suggestion weekly volume has immediate impact on rates matched, the last week volume in April was £17m but the rates were remained @ 5% for 5 year income. Since August 2016, the 5 year rate drops faster than volume matched.
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Post by davee39 on May 27, 2017 17:14:41 GMT
Add in the volume waiting to be matched. The lending rate drops competitively as lenders try to beat the queue. The Ratesetter auto invest rate then sets a new auto investment rate at each new low. This leads to a build up of waiting money and more undercutting to get ahead of the queue. The lower rates help RS compete with banks and should lead to more demand. The biggest surprise is that rates on rolling have held up so far.
The people to blame are the low rate fanatics at the BOE who appear terrified that a 0.25% rate increase would see half the country reposessed and the economy crash.
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ceejay
Posts: 971
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Post by ceejay on May 28, 2017 9:05:58 GMT
Thanks for the comments. I understand that there is a market at work here - in fact one of the things that attracted me to RS in the first place was the transparency of the market in action.
However, it seems to me that accepting 2% return on a 1 year investment which has some risk attached is wholly irrational. As has been pointed out, this is doubtless happening because of laziness rather than stupidity, as people have been content to set autoinvest at market rate and then sit back.
But, still - are none of these people noticing what's going on? So it's not just the BOE who are to blame - lenders are allowing this to happen.
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Post by ruralres66 on May 30, 2017 8:47:30 GMT
Want a laugh?
Last Matched Rates
Rolling 2.2% 1 Year 1.8% 5 Year 3.1%
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Post by ruralres66 on May 30, 2017 9:37:08 GMT
Rolling 2.2% at 10:34 1 Year 1.8% at 23:31 5 Year 3.0%
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Post by yorkshireman on May 30, 2017 10:01:35 GMT
Want a laugh? Last Matched Rates Rolling 2.2% 1 Year 1.8% 5 Year 3.1% That's not funny, I may report the post to the mods as unsuitable material for this platform.
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ashtondav
Member of DD Central
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Post by ashtondav on May 30, 2017 10:55:40 GMT
I think it's funny. I just love a bit of slap stick comedy, it's like watching Charlie Chaplin wandering down the street completely oblivious to the massive banana skin that will make him slip and fall in a pile of poop.
RS 5 year product needs a health warning - not just a wealth warning.
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erno
New Member
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Post by erno on May 30, 2017 11:57:04 GMT
I would say it is tin foil hat time, there is a long line of small bits on offer dropping the rate from 4.6 to 3% right now, and low and behold there is a large loan request at 3%. IF the tin foil hat is correct I hope it backfires on them!
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Post by ruralres66 on May 30, 2017 12:26:57 GMT
Want a laugh? Last Matched Rates Rolling 2.2% 1 Year 1.8% 5 Year 3.1% That's not funny, I may report the post to the mods as unsuitable material for this platform.
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Post by ruralres66 on May 30, 2017 12:36:16 GMT
Sorry if I caused you some offense and none was intended, I can assure you.
I know it is not funny! I was being ironic and sarcastic as you often are in posts.
I thought you had a sense of humour ...?
as you often put derogatory descriptions of lenders with a strikethough if I remember correctly?
( eg "... half wits lenders, unsuspecting autobidder sophisticated investor, Because no one knows their a**e from their elbow or to put it more politely, they don’t know what they are doing. ......)
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Post by yorkshireman on May 30, 2017 14:15:57 GMT
Sorry if I caused you some offense and none was intended, I can assure you. I know it is not funny! I was being ironic and sarcastic as you often are in posts. I thought you had a sense of humour ...? as you often put derogatory descriptions of lenders with a strikethough if I remember correctly? ( eg "... half wits lenders, unsuspecting autobidder sophisticated investor, Because no one knows their a**e from their elbow or to put it more politely, they don’t know what they are doing. ......)I understood the tenor of your post and there’s really no need to apologise as no offence taken. If anything it should be me making the apology if I didn’t make it clear that my comment about reporting the post to the mods was made entirely in jest and if anything, was a bit of fun at the expense of the mods!
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