ashtondav
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Post by ashtondav on Oct 30, 2017 6:55:53 GMT
At these coverage levels I have already factored in a 1% point reduction in interest. My 5 year portfolio has a current interest rate of 6.1%. I am budgeting 5.1% through the next debt crisis cycle.
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mark123
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Post by mark123 on Oct 30, 2017 9:59:33 GMT
At these coverage levels I have already factored in a 1% point reduction in interest. My 5 year portfolio has a current interest rate of 6.1%. I am budgeting 5.1% through the next debt crisis cycle. Very sensible. Your average of 6.1% less provision of 1% for potential haircut less tax is above inflation and is difficult to beat with conventional savings. Those on Rolling at 3.2% less potential haircut less tax does not beat inflation and is difficult to justify against several alternatives with FSCS cover. Everybody has their own risk appetite. Personally, I only lend at 6.4% and above (it usually goes out within a week or two).
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r00lish67
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Post by r00lish67 on Oct 30, 2017 10:24:17 GMT
At these coverage levels I have already factored in a 1% point reduction in interest. My 5 year portfolio has a current interest rate of 6.1%. I am budgeting 5.1% through the next debt crisis cycle. Very sensible. Your average of 6.1% less provision of 1% for potential haircut less tax is above inflation and is difficult to beat with conventional savings. Those on Rolling at 3.2% less potential haircut less tax does not beat inflation and is difficult to justify against several alternatives with FSCS cover. Everybody has their own risk appetite. Personally, I only lend at 6.4% and above (it usually goes out within a week or two). Given events in recent days on this forum I feel stupid saying this, but are you underreacting ashtondav ? I invest with RS, and would be happy with the outcome you envisage if it were to come true. My concern is, if the illusion (for some) of safety is broken, what happens to RS? I think the negative effect might be very strong indeed. They recently took on a £14m (was it, or 12?) debt from their losses outside of the PF just to avoid that happening, so I'd guess they're pretty concerned about doing that. Edit: I would say that with the forthcoming ISA, hopefully RS will have a good opportunity to depress rates and increase their margins to restore the PF to better health. Not great for new lenders, but better for existing ones hopefully.
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dorset
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Post by dorset on Oct 30, 2017 10:30:09 GMT
Agreed I now only use RS for the five year market and then only at 6% plus which is probably a fair reflection of the risk.
The haircut will happen the only questions being when and by how much.
What will be interesting is how RS deal with PR damage limitation caused by a haircut. The average RS punter who does not read this forum and assumes that 6% comes with no risk may react rather badly, probably panic and create a liquidity crisis on rolling.
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Post by beeje13 on Oct 30, 2017 18:44:51 GMT
In this scenario of an interest rate reduction, wouldn't you expect quite alot of withdrawals, reducing supply from the lending side and therefore cause rates to increase anyway, cancelling out an imposed rate reduction?
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Post by davee39 on Oct 30, 2017 19:39:10 GMT
In this scenario of an interest rate reduction, wouldn't you expect quite alot of withdrawals, reducing supply from the lending side and therefore cause rates to increase anyway, cancelling out an imposed rate reduction? The rates to the borrower will have to rise to pay a greater contribution to the PF. RS is not the only lender, in a highly competitive market borrowers will have other options. If RS suffers increased defaults it is likely that other lenders will also suffer so there may well be a wider increase in rates across the market. Currently the 6%+ available to lenders is not proving as attractive as might be expected. so I would expect to see more institutional funding to stop rates getting uncompetatively high.
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