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Post by goldservice on Jul 20, 2014 15:04:06 GMT
On a Sunday at the end of June*, when the total bid on the 5 yr market fell to £45k, I was watching carefully to see what would happen when the funds dried up - just how high would the rate go? Then a single bid for £50k appeared, at a rate about 2% below the current rate. I assumed that it had been triggered automatically as an underwriting mechanism within RS itself. *It really was £45k - see my post on 30 June on the 'Acceptable rates.....' thread
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Post by geoffrey on Jul 21, 2014 6:50:25 GMT
On a Sunday at the end of June, when the total bid on the 5 yr market fell to £45k, I was watching carefully to see what would happen when the funds dried up - just how high would the rate go? Then a single bid for £50k appeared, at a rate about 2% below the current rate. I assumed that it had been triggered automatically as an underwriting mechanism within RS itself. It's too much of a coincidence isn't it that it seems to have happened again yesterday? Sure enough today's "market rate" is 6.1%, and as a result £160.8K made up of 931 micro-loans of auto-lending has poured in at 6.1%. These lenders are not being best served by such tactics. If RS has auto-underwriting mechanisms, fair enough, but the underwriting should be at the market rate in force at the time (yesterday was 6.2%) not in a way that destabilizes the market and forces auto-lend offers to take a cut below the market rate. RS has some explaining to do.
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spiral
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Post by spiral on Jul 21, 2014 8:36:27 GMT
At the end of the day, lenders are a customer just like borrowers. If we don't like what we see, we can choose to go elsewhere. Personally, I'd like to understand the mechanisms in place in order that I can use that info to my advantage but that's just my analytical brain at work. Ultimately, I'll get a rate I'm happy with, I may just have to wait a couple more days. I'm sure a couple of months ago there was a similar discussion regarding money appearing at 5.6% when the MR was closer to or around 6.0%. I can certainly remember in my early days at Zopa, similar discussions surrounded people offering money at 1% or even less.
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oldgrumpy
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Post by oldgrumpy on Jul 21, 2014 8:41:07 GMT
At the end of the day, lenders are a customer just like borrowers. If we don't like what we see, we can choose to go elsewhere. Personally, I'd like to understand the mechanisms in place in order that I can use that info to my advantage but that's just my analytical brain at work. Ultimately, I'll get a rate I'm happy with, I may just have to wait a couple more days. I'm sure a couple of months ago there was a similar discussion regarding money appearing at 5.6% when the MR was closer to or around 6.0%. I can certainly remember in my early days at Zopa, similar discussions surrounded people offering money at 1% or even less. Around May 20 here something odd was happening: p2pindependentforum.com/thread/402/acceptable-rates?page=4
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Post by geoffrey on Jul 21, 2014 8:49:47 GMT
Spiral: Yes but this clearly isn't just any money, but money designed to move the market by injecting liquidity (unsurprising maybe in these QE-inspired times). My point is that the 931 people with auto-lend set on have taken a 0.2%-0.4% cut over what would probably be the market rate today without that injection yesterday. When the auto-lend money was small, it was of less consequence. Now that the auto-lend money is >£100K daily, market "making" (not to use another m-word) has more serious consequences for naïve lenders. And the more savvy lenders may realize they are wasting their time and move off to WC, AC or others, which will in the end damage liquidity at RS.
Oldgrumpy: Thanks for the confirmation. I think we can now safely say that RS injects around £50K at rates that undercut the market when the cover ratio falls below a certain level or is predicted to. It seems this may even be an automated process.
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Post by yorkshireman on Jul 21, 2014 8:58:23 GMT
OK, I won’t use the expression “city boys” but this exemplifies what I have been saying for some considerable while, market “massaging” does happen.
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baz657
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Post by baz657 on Jul 21, 2014 17:10:35 GMT
So why is the current lender rate (5 years) down to 5.7% when the last match was at 6.1%?
>>6.0% £651.3k 5.8% £10 5.7% £7,000.00
Have the lunatics left the assylum?
Edit
Surprise Surprise
5 mins later
>>6.0% £651.3k 5.8% £10 5.7% £1,510.36
Somebody got a good deal... but last match is now showing as 5.7% which may bring the rate down psychologically.
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Post by westonkevRS on Jul 21, 2014 17:55:46 GMT
Can you let me know the name of the RateSetter employee or Bot developer that is manipulating the markets? Because as the rates have gone up over a percent since Winter ended, I need to sack them for ineptitude.
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Post by davee39 on Jul 21, 2014 17:57:54 GMT
Kev, I suspect it might be Elvis.
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baz657
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Post by baz657 on Jul 21, 2014 17:58:29 GMT
I'm chilled .......... I was just amazed how quickly things can change.
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Investor
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Post by Investor on Jul 21, 2014 18:19:20 GMT
Can you let me know the name of the RateSetter employee or Bot developer that is manipulating the markets? Because as the rates have gone up over a percent since Winter ended, I need to sack them for ineptitude. Westonkev it sounds like you are fairly convinced that this is an inside job. Surely if that it the case you should not be expecting members of this forum to run a criminal investigation to find the perpetrator within your organisation. If you believe you have a rogue employee manipulating the market place then it is your reponsibility to set 'honey traps', install surveillance equipment or hire Dick Tracy to expose the fraudster. Like you I have felt that as the rates have only gone by one percent since Winter ended that there is definitely something awry going on. P.s The RV1 bus goes from just around the corner outside your office. Just turn as you come out of the office and you'll see the stop on Southwark Bridge Road. The bus will take you up towards Baker Street, I know a man there who can assist.
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spiral
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Post by spiral on Jul 22, 2014 7:51:05 GMT
Markets like this will always have outliers. By nature of them being outliers, they're gobbled up pretty quick and normality resumes. As I said earlier, in the early days of Zopa, conspiracy theories were abound by those willing to lend at sub 1% at a time when 8%+ was very easilt achievable. If the MR is being manipulated in order to lower rates, personally I would see a much easier option for RS would be to remover the MR altogether. There are far too many people that never bother looking or certainly far too infrequently to matter (if their money is going out) that I'm sure many with auto invest set up 12 months ago would still be lending in the 5.0 - 5.3 range forcing us all to lend at lower rates.
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Post by geoffrey on Jul 22, 2014 10:04:38 GMT
Maybe, but the difficulty of investing £50K on a Sunday, and why this happens repeatedly on Sundays when liquidity looks very low, and why the rate is always considerably below the MR, all make a bona fide outlier/naïve/generous rich investor rather unlikely. The odd £200, £300 or even £2,000 would be completely normal. Well in the end I don't care, I'm not forced to invest in RS. It's interesting that so many of the P2Ps have gone over to a fixed-rate model. I can see that coming on RS, probably as part of repackaging for a NISA offering.
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