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Post by bobthebuilder on Feb 20, 2015 0:06:38 GMT
Did you use an on-line calculator to compute this? If so please point me at it. i suppose that you have assumed that the monthly payments can be reinvested on the same terms? Calculated using Excel's XIRR formula which will be accurate to +/- 0.01 %. See this post of mine from last December for the full table of rates. The rates (AER) offered by W&Co for both monthly and maturity intrest are essentially the same. The advantage of the maturity interest option is the ability to defer the tax liability into a future tax year (e.g. after retirement) ------------------------------------------------------------------------------------------------------------------------------------------------------------- Alternatively you can use a scientific calculator to derive similar results from the standard compound interest formula A = P (1 + R/100) ^ T, where A is the accrued amount, P is principal, R is rate of interest and T is time (i.e. number of periods). Bear in mind that R and T have to be consistent with each other, so that if T is a number of months, then R must be a monthly interest rate. Taking as an example W’s 5 year product with a 5.25% monthly interest rate and a 6.00% interest rate when interest is paid only on maturity, it can be seen that the two rates are almost exactly equivalent. The total interest paid at maturity is 5 years x 6.00% = 30%, which is equivalent to a monthly rate of (1.30 ^ (1/60) – 1) * 12 = 5.25877%. The AER on the monthly rate of 5.25% is (1 + 5.25/1200) ^ 12 – 1 = 5.37819%, or 5.38% to 2 decimal places, and the AER on the calculated monthly equivalent rate of 5.25877% is (1 + 5.25877/1200) ^ 12 – 1 = 5.38739%, or 5.39% to 2 decimal places. Both of these figures are confirmed by Excel’s XIRR function (happily ).
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Post by bobthebuilder on Feb 18, 2015 6:46:47 GMT
The Daily Mail article is indeed well written, although I'm not sure about this quote from the Wellesley spokesman: "And, if Wellesley went bust, how would lenders and bondholders be treated? A spokesman said: 'They are completely ‘pari-passu’ i.e. treated on an equal footing. In the unlikely event Wellesley went bust, the company has a security trustee that would manage the run-off of its loan book." During the run-down of its loan book I presume that your ISA holding would continue to be administered by European Pensions Management (EPM), and a pdf file linked to in Wellesley's FAQs makes it clear that if Wellesley ceased trading, EPM would levy an annual admin fee of £250 + VAT, payable in advance. The 30 days' notice they say they will give you of this charge means nothing if you can't get your money out while the loan book is being run down. I'm not aware of a similar charge being levied by the security trustee on non-ISA investments. The hefty £100 + VAT charge for transfers out also seems to apply even if Wellesley don't cease trading. support.wellesley.co.uk/hc/en-gb/article_attachments/201682805/Wellesley_EPM_New_ISA_Supplementary_Charging_Schedule_Final.pdf
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Post by bobthebuilder on Feb 13, 2015 3:48:29 GMT
Some lucky people matched at 4.3% in the monthly access market during tonight's repayment run. That's more than the last match in the one year market.
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Post by bobthebuilder on Feb 12, 2015 21:10:48 GMT
I see that RS are now sending e-mail notifications when contracts are repaid early, a development I was told was in the pipeline a while back. New? They've been doing the notifications since (at least) 2011... and since about a year ago, the notifications I received have mentioned the specific contract and the amount of money. I wonder if there are different types of early repayment, some of which generate an email and some of which don't (e.g. a repayment of all but a small residual amount might not properly "close out" the loan and trigger the notification...?)
This official explanation for an early repayment received last December may clarify things:
“I am sorry to hear that you had one of your contracts repaid early and did not receive a notification. I completely agree that you should have been notified of this and I offer my apologies that you didn’t.
The cause is a current system limitation which is due to be upgraded in the very near future. On this occasion it was due to an extra repayment being made.
At present, we only have a lender notification in place if a borrower arranges a FULL loan redemption payment that results in lender contracts being repaid early. If the type of payment is an extra/partial payment and results in lender contracts being repaid early, a notification is not sent. With the contract in question, the borrower chose to make an extra repayment towards the loan alongside the regular monthly repayment. It was this extra repayment that caused your contract to be repaid early.”
-------------------------------------------------------------------------------------------------------------------------------- The early repayment notification I received last night referred specifically to an extra repayment being made, so it is this fix that appears to have been delivered. Another reason I have been given for early repayments in the monthly access market is a change to the borrower’s direct debit date, which up until now also failed to trigger an e-mail notification. It’s not clear at the moment whether this processing gap remains, or if it was fixed at the same time as the issue of extra repayments being made.
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Post by bobthebuilder on Feb 12, 2015 5:01:35 GMT
I see that RS are now sending e-mail notifications when contracts are repaid early, a development I was told was in the pipeline a while back. Thanks RS - very useful, as it means I no longer have to check the website on days when I have no scheduled repayments due. Even better on this occasion as I was able to reinvest the money at a rate higher than on the repaid contract
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Post by bobthebuilder on Feb 12, 2015 3:49:47 GMT
Wow! Matches at 4.0% in the monthly access market during last night's repayment run. Probably not much chance of the contracts standing, but fun to watch. Attachments:Monthly Access.xls (55.5 KB)
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Post by bobthebuilder on Feb 8, 2015 2:35:16 GMT
Edit - I see 5.2% or maybe 5.3% plus will probably get matched Sunday after all on the 3-yr market. Although the markets are looking thin, so I hope our friends with deep pockets are working over the weekend.... OK, I’ll dig out that spare £1m I had lying around Happy to be matched at 5.2%, even if it’s slightly galling to see someone else matched at 5.3% a few hours later. I know it’s only a few quid a year difference on the amount I have invested, but let’s face it – it’s as much about the fun of trying to beat the competition as it is about the money, and the big boys just spoil the fun.
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Post by bobthebuilder on Feb 7, 2015 8:59:09 GMT
It may be hard to argue that rates are being manipulated downwards in the five year market when we seem to be heading decisively in the direction of 6.3% or higher, but I’m much more suspicious about the three year market. At the very best, recent activity there highlights the malign influence of institutional money and fuels the belief that large borrow requests are being placed with certain institutions in the same way that share offerings are in the equity market. In the early hours of yesterday morning I noticed what appeared to be a good opportunity to take advantage of a spike in the three year market and placed a modest four figure offer at 5.2% in the hope, indeed expectation, that I would quickly be matched at that level. That expectation was based largely on the approved demand figure, extracted at 02:54 on 6/2, of £707.4K – far higher than the normal approved demand figure for this market – and the fact that the total amount of money in the Lender queue was only £155.6K. Even after the nightly repayment run, that amount had still increased to only £222.6K. A couple of borrow requests totalling roughly £52K quickly mopped up all the money on offer at rates up to 5.0% and started to nibble into the 5.1% queue, and then at 15:17 on 6/2, when I next checked on my loan offer, 7 huge borrow requests totalling nearly £0.5m had materialised. At this time the total funds on offer were only £84.0K, so getting matched at 5.2% looked a shoo-in. Fast forward 17 minutes, and the situation was completely transformed. The £0.5m of borrows had been matched at 4.8%, and I strongly suspect that the institutions that lent them the money had been told that the borrowers wouldn’t pay more than that. Why else would professional investors offer money at 4.8% when demand outstripped supply and the nearest competing offer was at 5.1%? As if that wasn’t enough institutional money wrecking the market, they’d also deposited another £200K at 5.0% and another £50K at 5.1%. By 15:50 all of this money had been moved to 4.8% and within a further 20 minutes the borrow requests I had been relying on to get matched at 5.2% turned up, quickly followed by a further £100K of institutional money at 4.7%. A spreadsheet showing the sequence of events is attached. I know it’s easy to formulate conspiracy theories, but there seems to me good reason here to suspect that RS managed the market to ensure that large borrow orders were filled, to the benefit of institutions and the detriment of small lenders. What is certain is that by allowing, by my estimation, a minimum of £850K of institutional money to flood the market in a single day, RS has disrupted the market and driven rates down significantly, at least in the short term.
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Post by bobthebuilder on Feb 3, 2015 5:53:29 GMT
I certainly wouldn’t class myself as an expert, but I’ll offer what I believe is a plausible explanation that others can contradict if they wish.
The holding account statement shows only the movements to and from the lending queues – it doesn’t show what happens to the money once it’s on the lending queue. It looks to me as if your £4000 1 yr Lend Offer on 25/3/14 was matched in more than one shape, and one of those shapes was for £3510.72. Market rate around that time was of the order of 3.8%/3.9%, so the interest payment of £86.06 on 10/11/14 is consistent with the £3510.72 shape having been repaid early, on 10/11. As I imagine you are aware, the £8.60 deduction on the same date was RS’s 10% lender fee that applied to loans created prior to 14/4/14.
Similarly the £462.40 entry on 17/11/14 would have been a return of capital relating to a partial match of your £4000 Rolling Lend order on 16/10/14. You say that the entries shown are just part of your statement, so I assume there will be other entries dated 17/11 on the statement that collectively add up to £4000.
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Post by bobthebuilder on Jan 27, 2015 1:23:38 GMT
...split over the average 3 years that your money is out gives over 6.3%. Seems a good and fair deal to me, you guys can be hard to please! Ah yes ... I had overlooked that the average time the money is actually out is a long way under 5 years... Is the average time a 3 year loan out around 28 months? Just checked a loan I have in the three year market, and the repayment schedule shows me getting back half my capital in around 19 months.
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Post by bobthebuilder on Jan 18, 2015 9:26:02 GMT
Maybe they feel that they have dropped their rates too much, and are adjusting (which they have every right to do). Now that one month is 2.9% who will bother with one year at 3%, so that could receive a tweak too. Unfortunately the rate is variable on a daily basis whilst the notice period is fixed, so there's no guarantee that you'll continue to earn 2.9% while you wait the 30 days (or more, since repayment after 30 days is not guaranteed either) for your money to be returned. From W's website: "The 30 Day Easy Access product offers a variable rate of interest which fluctuates on a daily basis according to borrower demand and changes to the Bank of England Base Rate. Interest is calculated on a daily basis and can either be paid every 30 days as income or can be automatically reinvested every 30 days". Since future borrower demand is unpredictable (and I wouldn't rely on their lending stats as a guide since they're updated very irregularly), people might prefer the certainty of RS, even if W pay interest when funds are unmatched to loans.
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