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Post by ruralres66 on Oct 24, 2017 7:21:24 GMT
This short term only does not equate with reliable lending and planning.
Convenient as you can in theory cut and run for no fee, but what happens if a lender withdrawal run is triggered?
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mary
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Post by mary on Oct 24, 2017 7:59:18 GMT
As with all P2P, If lenders desert the platforms inevitably fail as they rely on origination fees (as well as interest spread) for their revenue, and as lenders desert the interest spread will narrow as platforms attempt to reverse lender desertion!
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Post by WestonKevTMP on Oct 25, 2017 8:35:04 GMT
As with all P2P, If lenders desert the platforms inevitably fail as they rely on origination fees (as well as interest spread) for their revenue, and as lenders desert the interest spread will narrow as platforms attempt to reverse lender desertion! This statement is true in general, but not of RateSetter. Several years ago RateSetter began a transition from up-front fees to loan administration fees. It isn't something that could be done overnight as the start-ups required those up-front fees for operational costs. However RateSetter has largely transitioned now, and I understand the vast majority of fees are derived from the loan book (although some loans still have up-front fees, it depends on source) Kevin.
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pikestaff
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Post by pikestaff on Oct 25, 2017 12:07:01 GMT
This short term only does not equate with reliable lending and planning. Convenient as you can in theory cut and run for no fee, but what happens if a lender withdrawal run is triggered? Then you are in for the duration of the undelying loans, unless confidence returns. But that was always the case. Whether most lenders understand this is another matter...
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ceejay
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Post by ceejay on Oct 25, 2017 16:05:04 GMT
Then you are in for the duration of the undelying loans, unless confidence returns. But that was always the case. Whether most lenders understand this is another matter... Remembering that in the world of Ratesetter, the phrase "duration of the underlying loan" is key ... it may not be the same as the length of the loan that you have apparently signed up for (e.g. "One Year Market" loans being applied to someone borrowing for two years or even more).
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ashtondav
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Post by ashtondav on Oct 26, 2017 7:02:41 GMT
Best to think you are committed for five years.
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mark123
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Post by mark123 on Oct 26, 2017 8:41:46 GMT
Best to think you are committed for five years. Yes, and if you are potentially committed for five years, why not invest in the Five-year market and get a better rate? With a bit of patience you can get 6.0% or 6.5% which IMHO is a decent return that balances the risk from a below-target provision fund - in contrast to the rates on Rolling. So I would say there is only one sensible market, Five year...
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puddleduck
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Post by puddleduck on Oct 26, 2017 9:14:11 GMT
Best to think you are committed for five years. Yes, and if you are potentially committed for five years, why not invest in the Five-year market and get a better rate? With a bit of patience you can get 6.0% or 6.5% which IMHO is a decent return that balances the risk from a below-target provision fund - in contrast to the rates on Rolling. So I would say there is only one sensible market, Five year... I dis-agree with that, as the 5 year rate is amortising you get about 1/2 of what you think you might get as capital is repaid (I assume you know this, but it tends to escape some people to I apologise if I am telling Granny how to suck eggs) For example if my maths is right, 2k in the 5 year rate at 6.5% will pay back 2,338. 23 over term, or 338.23 interest in total- I suspect some people would be expecting about 130 a year in interest so about 650 interest over term. So I think to effectively mentally divide the published 5 year rate by about 50% to get a 'near enough' estimate - when you look it at like that, is not so great is it for 5 years of unsecured lending. I think Rolling and 1 year is where the action is personally.
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ashtondav
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Post by ashtondav on Oct 26, 2017 10:02:52 GMT
As long as you accept you may be contracted in for five years...
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Post by GSV3MIaC on Oct 26, 2017 11:39:17 GMT
If interest rates rocket up, you'll be stuck (probably) for 5 years. If interest rates go down (barely possible overall, but plausible for some particular borrower) you'll get your money back 'real soon'. So over 5 years you get left with the lower rate stuff, or the 'can't refinance at lower cost' (which is OK with a PF, but scary without one).
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Post by propman on Oct 26, 2017 12:15:41 GMT
Yes, and if you are potentially committed for five years, why not invest in the Five-year market and get a better rate? With a bit of patience you can get 6.0% or 6.5% which IMHO is a decent return that balances the risk from a below-target provision fund - in contrast to the rates on Rolling. So I would say there is only one sensible market, Five year... I dis-agree with that, as the 5 year rate is amortising you get about 1/2 of what you think you might get as capital is repaid (I assume you know this, but it tends to escape some people to I apologise if I am telling Granny how to suck eggs) For example if my maths is right, 2k in the 5 year rate at 6.5% will pay back 2,338. 23 over term, or 338.23 interest in total- I suspect some people would be expecting about 130 a year in interest so about 650 interest over term. So I think to effectively mentally divide the published 5 year rate by about 50% to get a 'near enough' estimate - when you look it at like that, is not so great is it for 5 years of unsecured lending. I think Rolling and 1 year is where the action is personally. For the benefit of any newer readers not to see this rehearsed before, the interest from a 5 year loan will indeed be less than a 5 year bond at the same rate, but you are getting the agreed rate (except for potential loss of compounding). If you successfully relend at the same rate all the money repaid immediately, then you would indeed get the same interest as a 5 year bond, but you would also be committed to lend the money for up to a further 5 years at the end. Of course if you don't relend then you get the use of the money back sooner.
- PM
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Post by WestonKevTMP on Oct 29, 2017 6:28:17 GMT
With a bit of patience you can get 6.0% or 6.5%..... So I would say there is only one sensible market, Five year... I dis-agree with that, as the 5 year rate is amortising you get about 1/2 of what you think you might get as capital is repaid (I assume you know this, but it tends to escape some people to I apologise if I am telling Granny how to suck eggs) For example if my maths is right, 2k in the 5 year rate at 6.5% will pay back 2,338. 23 over term, or 338.23 interest in total- I suspect some people would be expecting about 130 a year in interest so about 650 interest over term. So I think to effectively mentally divide the published 5 year rate by about 50% to get a 'near enough' estimate - when you look it at like that, is not so great is it for 5 years of unsecured lending. I think Rolling and 1 year is where the action is personally. This doesn't make mathematical sense, unless the money returned during the five years you just put under the mattress. Most people take the money and invest, either elsewhere, or as I do back into the 5-year market thus attaining a rate that does average above 6%
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Post by p2plender on Oct 29, 2017 11:55:21 GMT
Still glad to see you post comments here WK!
Another year and I will have hit a rather large return of interest on the RS platform after nearly 7 years. Still a happy customer (thus far).
Edit: Just logged on and remembered the ghastly new homepage, ahh well, can't have it all. I never liked the colour change several moons ago but I got over that.
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Post by BrianC on Oct 29, 2017 20:16:54 GMT
Having to continually reinvest to get your 6% or target rate is a reason I’ve stopped lending in the 5 year market. The problem is that if you do that you will always be 5 years away from getting all your money back without paying fees. Instead I lent large amounts in the 5 year market and now reinvest all repayments in to rolling. It reduces my return but means over time I have less capital locked in for years. Maybe not quite such a problem tho after this week when sell out fees are reduced.
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puddleduck
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Post by puddleduck on Oct 30, 2017 9:10:39 GMT
Having to continually reinvest to get your 6% or target rate is a reason I’ve stopped lending in the 5 year market. The problem is that if you do that you will always be 5 years away from getting all your money back without paying fees. Instead I lent large amounts in the 5 year market and now reinvest all repayments in to rolling. It reduces my return but means over time I have less capital locked in for years. Maybe not quite such a problem tho after this week when sell out fees are reduced. I am averaging 4.2% on rolling and 7.4% on 1 year, I still can't see how the sums add up for 5 year even at 6.5% when if I keep rolling over over 3.5%+ I will beat 5 year....with pretty much instant access. I agree with the opening premise in the title
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