keith
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Post by keith on Dec 7, 2017 7:10:06 GMT
There’s something I don’t quite understand and maybe someone could enlighten me a little.
I understand that if I put my money into rolling then I will get exposure to loans of all durations. Presumably, though, the mix of loans is more short duration than, say, the five year offering as it would seem to pose more of a liquidity issue to do otherwise.
What I don’t get, though, is how the loans are offered. Right now there’s some 1.3 M up for grabs on rolling @4.1%, zilch on the one year @3.0% (lowest offer) and zilch on the 5 year @4%. I cant see that all of this 1.3M is all on a month for month basis and some must be longer duration. So, my question, why is this not being offered to the longer duration markets or is there some algorithm or rule that comes into play?
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keith
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Post by keith on Dec 7, 2017 7:18:17 GMT
Here’s a screen shot in case the above was not clear
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pikestaff
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Post by pikestaff on Dec 7, 2017 7:49:01 GMT
RS will allocate business in whatever way maximises their margin, subject to liquidity constraints and market demand. It would seem they have little need of 5 year money at the moment, which suggests to me some combination of:
(1) more experience with their model leading them to be more confident of liquidity (which is risky)
(2) they have more emergency back-stop liquidity facilities available if needed
(3) in a desperate bid to boost their margin and/or strengthen the provision fund they have taken a positive decision to work with a higher risk of liquidity drying up.
I fear it might be (3). That's our risk, but it has the potential to be very damaging for the business.
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puddleduck
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Post by puddleduck on Dec 7, 2017 9:04:35 GMT
Higher rate 1 year loans seem to me to have a high chance of paying back in 2 to 3 months rather than going to full term in my experience.
So I am actually using 1 year rather than Rolling at the moment, as this seems to be paid back every 2 or 3 months, but the rate is usually 1 / 1.5% higher than rolling over the same period.
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Post by fiatlender on Dec 7, 2017 9:27:40 GMT
Here’s a screen shot in case the above was not clear keith I would remove that image asap, as it contains personal info about yourself and your finances. You dont want that sitting around on a public forum.
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keith
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Post by keith on Dec 7, 2017 9:54:36 GMT
Thanks - good spot. I didn’t notice that.
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TheDriver
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Slightly bonkers
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Post by TheDriver on Dec 7, 2017 23:32:28 GMT
RS will allocate business in whatever way maximises their margin, subject to liquidity constraints and market demand. It would seem they have little need of 5 year money at the moment, which suggests to me some combination of: (1) more experience with their model leading them to be more confident of liquidity (which is risky) (2) they have more emergency back-stop liquidity facilities available if needed (3) in a desperate bid to boost their margin and/or strengthen the provision fund they have taken a positive decision to work with a higher risk of liquidity drying up. I fear it might be (3). That's our risk, but it has the potential to be very damaging for the business. In which case, unless it's 2 (and very large!) it could be a reprise of Northern Rock
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ashtondav
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Post by ashtondav on Dec 8, 2017 7:31:49 GMT
Oh, it could very well be NR again. RS management are not averse to high risk decision making, after all!
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pikestaff
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Post by pikestaff on Dec 8, 2017 9:02:49 GMT
RS will allocate business in whatever way maximises their margin, subject to liquidity constraints and market demand. It would seem they have little need of 5 year money at the moment, which suggests to me some combination of: (1) more experience with their model leading them to be more confident of liquidity (which is risky) (2) they have more emergency back-stop liquidity facilities available if needed (3) in a desperate bid to boost their margin and/or strengthen the provision fund they have taken a positive decision to work with a higher risk of liquidity drying up. I fear it might be (3). That's our risk, but it has the potential to be very damaging for the business. In which case, unless it's 2 (and very large!) it could be a reprise of Northern Rock That's one thing it won't be. Unlike Northern Rock, we have no right to our money unless and until the borrowers repay. If liquidity dries up, it's our problem.
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