spiral
Member of DD Central
Posts: 910
Likes: 456
|
Post by spiral on Jun 25, 2014 13:48:09 GMT
Just got this message when trying to log in:
"The RateSetter markets are closed for a short while.
They will be opened in the next hour or so. Sorry for any inconvenience."
Who's had all the money then!
|
|
oldgrumpy
Member of DD Central
Posts: 5,087
Likes: 3,233
|
Post by oldgrumpy on Jun 25, 2014 13:58:54 GMT
Strange. Nothing appears amiss when I log in.
|
|
markr
Member of DD Central
Posts: 766
Likes: 426
|
Post by markr on Jun 25, 2014 14:54:38 GMT
Likewise. I've been in and out of RS all day keeping an eye on some funds on the market and saw nothing unusual. However I had two dollops on the 5 year market separated by about £150k but I got the "fully matched" emails at exactly the same time so maybe there was a short pause followed by a catch-up.
|
|
spiral
Member of DD Central
Posts: 910
Likes: 456
|
Post by spiral on Jun 25, 2014 16:57:19 GMT
It seems I was right, someone did take all the money. Between 1450 and 1750 about 230K was disbursed from the 5yr market. Funds now looking very low.
|
|
mikeb
Posts: 1,053
Likes: 463
|
Post by mikeb on Jun 25, 2014 17:38:28 GMT
It seems I was right, someone did take all the money. Between 1450 and 1750 about 230K was disbursed from the 5yr market. Funds now looking very low. Presumably site was down briefly to check the higher percentage rate numbers still work ... <Axl>Nib nib nibbling on 6.4 ... ow ow .... ayayay ... </Axl>
|
|
pikestaff
Member of DD Central
Posts: 2,140
Likes: 1,486
|
Post by pikestaff on Jun 25, 2014 22:20:00 GMT
Blimey! Funds are looking low, aren't they? Except in the 1 year market, which is odd...
Not good for confidence. Could someone from RS comment?
|
|
angrysaveruk
Member of DD Central
Back and to the left..
Posts: 1,036
Likes: 655
|
Post by angrysaveruk on Jun 25, 2014 23:54:34 GMT
Rates are going a bit crazy 5.3% in 3 year and 6.4% in 5 year. I think there are a couple of things rate setter should consider to increase liquidity
1) Allow people to transfer money in faster to take advantage of higher rates.
2) Make it less costly to sell loans before maturity - this would encourage people to longer maturity loans. For example I might have a 6% 5 year loan that I have kept for 2 years, if I sell this on it is a 6% 3 year loan which should would be very attractive for someone and should be traded at a premium. Also the ability to trade loans in this way would make the whole platform alot more interesting.
|
|
spiral
Member of DD Central
Posts: 910
Likes: 456
|
Post by spiral on Jun 26, 2014 7:20:23 GMT
2) Make it less costly to sell loans before maturity - this would encourage people to longer maturity loans. For example I might have a 6% 5 year loan that I have kept for 2 years, if I sell this on it is a 6% 3 year loan which should would be very attractive for someone and should be traded at a premium. The problem with this is it would make everyone opt for the 5 yr market even if they only wanted a 1 month term as the interest rate would be better and thus undermining the stability of the 5yr market. On the other side of the coin however, I don't want lower rates as I am currently only interested in the 5yr market so the higher the better. I've matched a few offers today/yesterday at 6.4%. Back of the net!
|
|
angrysaveruk
Member of DD Central
Back and to the left..
Posts: 1,036
Likes: 655
|
Post by angrysaveruk on Jun 26, 2014 10:19:14 GMT
2) Make it less costly to sell loans before maturity - this would encourage people to longer maturity loans. For example I might have a 6% 5 year loan that I have kept for 2 years, if I sell this on it is a 6% 3 year loan which should would be very attractive for someone and should be traded at a premium. The problem with this is it would make everyone opt for the 5 yr market even if they only wanted a 1 month term as the interest rate would be better and thus undermining the stability of the 5yr market. On the other side of the coin however, I don't want lower rates as I am currently only interested in the 5yr market so the higher the better. I've matched a few offers today/yesterday at 6.4%. Back of the net! Would depend on the transaction cost and there is also the risk that the current rates go up and you cannot sell unless you discount the loan. if rate setter were to put something like the zopa 1 percent transaction cost it would discourage flipping but encourage more people to hold longer maturity loans.
|
|
|
Post by davee39 on Jun 26, 2014 17:17:51 GMT
A five year loan that has made repayments for two years is not the same as a three year loan taken out today, based on the profile of when a loan is most likely to default. This is of course wholly irrelevant due to the provision fund. Overall I think there is too much emphasis on loan sales and costs. The facility should be considered as a means of emergency access, and allowance made for the capital repayment stream. My guess is that new cash savings have fallen as we enter the season for paying holiday balances and other summer interests. A perfect market should be attracting more funds, but this depends on perfect knowledge, and many customers may be too busy enjoying the warm weather, football etc to be closely monitoring their accounts.
|
|
|
Post by p2plender on Jun 26, 2014 19:39:28 GMT
perhaps some funds going to nisas as well
|
|
bigfoot12
Member of DD Central
Posts: 1,817
Likes: 816
|
Post by bigfoot12 on Jun 26, 2014 20:08:05 GMT
2) Make it less costly to sell loans before maturity - this would encourage people to longer maturity loans. For example I might have a 6% 5 year loan that I have kept for 2 years, if I sell this on it is a 6% 3 year loan which should would be very attractive for someone and should be traded at a premium. The problem with this is it would make everyone opt for the 5 yr market even if they only wanted a 1 month term as the interest rate would be better and thus undermining the stability of the 5yr market. On the other side of the coin however, I don't want lower rates as I am currently only interested in the 5yr market so the higher the better. I've matched a few offers today/yesterday at 6.4%. Back of the net! I agree with angrysaveruk. This the one aspect of the Ratesetter model I've never understood. Almost everything else is better than much of the competition. Whilst I am in agreement with spiral's final point the first one is wrong and dangerous. Lend £1 000 for 5 years at a rate of 6.2%, then exit at 6.5% one month later. Not only have you done worse than lending for one month, you have actually lost £1.79, and worse than that you owe HMRC tax on £5.16. (Numbers are approximate, using simplest available spreadsheet functions.)
|
|
angrysaveruk
Member of DD Central
Back and to the left..
Posts: 1,036
Likes: 655
|
Post by angrysaveruk on Jun 26, 2014 21:00:30 GMT
A five year loan that has made repayments for two years is not the same as a three year loan taken out today, based on the profile of when a loan is most likely to default. This is of course wholly irrelevant due to the provision fund. I would say a 5 year loan that has made repayments for 2 years is quite a bit less risky than a new 3 year loan, although as you say the provision fund does reduce the risk in my opinion the provision fund is only partial insurance and try to diversify my loan book accordingly. It would be interesting to hear comment from Ratesetter themselves on their opinion on "relaxing" the penalties of selling on loans to other lenders. I am fairly certain it would attract more money onto the market and smooth out these spikes in rates which would certainly benefit everyone involved.
|
|
spiral
Member of DD Central
Posts: 910
Likes: 456
|
Post by spiral on Jun 27, 2014 12:01:13 GMT
The problem with this is it would make everyone opt for the 5 yr market even if they only wanted a 1 month term as the interest rate would be better and thus undermining the stability of the 5yr market. On the other side of the coin however, I don't want lower rates as I am currently only interested in the 5yr market so the higher the better. I've matched a few offers today/yesterday at 6.4%. Back of the net! Whilst I am in agreement with spiral's final point the first one is wrong and dangerous. Lend £1 000 for 5 years at a rate of 6.2%, then exit at 6.5% one month later. Not only have you done worse than lending for one month, you have actually lost £1.79 This is not too different to B/S term bonds. Some 5 yr bonds (in the past anyway) penalise you in excess of 12 months interest if you want out. I've read cases where people close the account after 6 months and get back less than they put in. In terms of rate rises, that is what they insure against. I've recently had a 5% B/S bond mature, today that's good but if rates on 5 yr bonds were at 10%, I would want out if there was no penalty. I think my original comment regarding RS was too simplistic, what I was really trying to say is that if rates for 1 month are at 2% and 5 yr are at 6%, something has to discourage people opting for the 6% rate when in effect, they are really after a short term rate. I'm not fully aufait with all the charges applicable but if Zopa had a monthly market, using the rates I've used as an example after about 6 months, you would have been better off using the 5 yr market and cashing out rather than rolling up the 1 month rate.
|
|
angrysaveruk
Member of DD Central
Back and to the left..
Posts: 1,036
Likes: 655
|
Post by angrysaveruk on Jun 27, 2014 15:29:14 GMT
It is a bit different than cashing in a deposit account early since you have to find a third party willing to buy the loan from you. If rates have risen they you will have to sell it at a discount a bit like a government bond so there is not an incentive to sell early if rates rise or fall unless you need to get you money out earlier.
|
|