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Post by GSV3MIaC on Nov 20, 2014 20:54:52 GMT
See, we can time-slice as well as salami slice!!
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Post by geoffrey on Nov 21, 2014 6:27:42 GMT
Pending Live Borrower Demand for the 1-year (and below) market: £17,209K, i.e. £17.2 million?! Did RS hit the jackpot, or does someone have fat fingers?
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sl75
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Post by sl75 on Nov 21, 2014 17:13:16 GMT
Pending Live Borrower Demand for the 1-year (and below) market: £17,209K, i.e. £17.2 million?! Did RS hit the jackpot, or does someone have fat fingers?
... or has someone been spamming the application form with a bot, resulting in a stack of "pending" demand that will be summarily dismissed as and when the underwriters get to it? Only the "Approved" demand is relevant to the live marketplace. [Edit: unless of course this is "normal", in which case it may well be including in the "pending" section demand from short-term loans due to roll over within the next month - these would of course form part of the demand on the 1-month]
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spiral
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Post by spiral on Nov 24, 2014 16:31:57 GMT
Could someone that regularly lends in the 1 month market confirm if there is a particular time of day that the "rollovers" occur or are they randomly spread throughout the day? e.g. are all repayments made and then immediately rematched as they rollover. Thanks Spiral
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Post by wibble on Nov 25, 2014 16:53:31 GMT
e.g. are all repayments made and then immediately rematched as they rollover. I lend regularly in the monthly market, but I don't allow the system to automatically re-invest - my spread over the past month alone is 2.4 to 2.7% (and the past 2 months it's between 2.3 - 2.8) - so it's in my own best interests (no pun intended) to micro-manage. Currently have 13 contracts reasonably evenly spread throughout the month. Not much help, but that's all I have!
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jlend
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Post by jlend on Nov 26, 2014 10:14:41 GMT
Could someone that regularly lends in the 1 month market confirm if there is a particular time of day that the "rollovers" occur or are they randomly spread throughout the day? e.g. are all repayments made and then immediately rematched as they rollover. Thanks Spiral In case it's any use
- I have 100+ contracts on the 1 month market - Automatic re-investment at market rate - Seems to roll-over overnight without any problems with payments immediately matched, not noticed any that haven't but of course there may be some on days/times I don't check - Rates on my loans at the moment are between 2.4 to 2.7 - Rates on loans that matured last month were between 2.4 and 3.0
It may well be you can beat these market rates if you do it manually if you have time and patience.
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spiral
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Post by spiral on Nov 26, 2014 18:35:38 GMT
Judging by what jlend has said it appears that rematching occurs almost immediately after repayment for MR.
Wibble, as you set your own rate, do you find that most of the rematches occur the following day in 1 go i.e. the manually set rate joins the front of tomorrows queue?
I'm trying to understand if the nature of this market is such that 99% of matches occur in 1 go (at rollover time) and only new loans are taken randomly throughout the day as is the case with say the 5yr market.
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Post by wibble on Nov 27, 2014 13:56:33 GMT
Wibble, as you set your own rate, do you find that most of the rematches occur the following day in 1 go i.e. the manually set rate joins the front of tomorrows queue? That's not really been my experience. I tend to pick the best rate that I feel will definitely be matched within the same day (usually, I stick my offer no more than 150k in the queue) - it's almost always matched within the same day. Additionally, I've recently been chancing my arm a little and splitting larger sums into smaller offers. So instead of one offer at 2.4%, I'll make perhaps 3 smaller offers at 2.4, 2.5 and 2.6. I regularly see the 3 offers being filled at different times in the same day. Occasionally I'm too greedy and the higher offers may need tweeking down the next morning to be filled. Hope that helps
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sl75
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Post by sl75 on Nov 27, 2014 15:16:00 GMT
Although I'm not involved in the market, my understanding is that the overnight rematching process would work broadly as follows:
1. "borrower" is matched against the market for the amount required to roll over their loan until their next repayment. 2. This amount together with the borrower's current repayment [or an equivalent amount from the PF if necessary] is used to repay the 1 month loan that has just matured. 3. The lender's instructions for re-investment of monies from maturing 1 month loans are followed - in many cases this will result in the money being added to the queue at market rate in the 1 month market.
As each of those steps are taken for each loan that rolls over, it will potentially allow an amount many times more than the amount on the market at the start of the run to be re-matched against new lenders, as a large proportion of the repaid funds are immediately made available for lending again...
A residual amount would of course remain "on the market", to be matched to new loans during the following day, or to form the initial amount offered for lending during the following night's run.
I would note, for example, that at time of writing, the monthly market shows "Matches last 24 hours: 2248", but looking at the market as of right now, the number of offers on the marketplace at the two lowest rates is just 159, with only 47 offers at the very lowest rate, suggesting that many times the amount actually on the market now was matched "overnight".
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Post by accumul8 on Jan 19, 2015 15:09:18 GMT
This is an interesting thread but I am not sure we have still got a definitive answer. In the 3 year market, lenders lend for 3 years and borrowers borrow for 3 years (altho they can repay early if they wish to) so there is an axact matching of maturities. The same applies in the 5 year market. However, in the monthly market, it seems that lenders lend for up to 35 days but in general, borrowers borrow for between 6 and 12 months. In that case, there is a mismatch between maturities for lenders and borrowers. In normal market conditions, this mismatch is managed by varying the monthly interest rate. If there is a shortage of funds from lenders, then the rate is raised and this attracts new money in. Recently, I have experienced the lending rate spike overnight to 3.5% even though the official daily statistic (presumably a weighted average) says that the rate was only 2.9% or 3.0%. But what happens if the "public" suddenly lose confidence in the P2P market? For example, in the next recession bad debt losses start to mount or maybe a P2P lender in Europe or the US goes out of business (and is featured on BBC News as they helpfully did with Northern Rock!). Then suddenly, all the monthly lenders (who are the most liquid) would cease to roll over and want their money out as soon as it matured but because these are not real monthly loans there would not be the cash to pay them. Would RS step in and fund the rollovers in order to repay the monthly lenders? If so, where would they get the cash from? A bank loan?
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jlend
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Post by jlend on Jan 19, 2015 15:46:39 GMT
This is an interesting thread but I am not sure we have still got a definitive answer. In the 3 year market, lenders lend for 3 years and borrowers borrow for 3 years (altho they can repay early if they wish to) so there is an axact matching of maturities. The same applies in the 5 year market. However, in the monthly market, it seems that lenders lend for up to 35 days but in general, borrowers borrow for between 6 and 12 months. In that case, there is a mismatch between maturities for lenders and borrowers. In normal market conditions, this mismatch is managed by varying the monthly interest rate. If there is a shortage of funds from lenders, then the rate is raised and this attracts new money in. Recently, I have experienced the lending rate spike overnight to 3.5% even though the official daily statistic (presumably a weighted average) says that the rate was only 2.9% or 3.0%. But what happens if the "public" suddenly lose confidence in the P2P market? For example, in the next recession bad debt losses start to mount or maybe a P2P lender in Europe or the US goes out of business (and is featured on BBC News as they helpfully did with Northern Rock!). Then suddenly, all the monthly lenders (who are the most liquid) would cease to roll over and want their money out as soon as it matured but because these are not real monthly loans there would not be the cash to pay them. Would RS step in and fund the rollovers in order to repay the monthly lenders? If so, where would they get the cash from? A bank loan? Have a look at clause 11.3 of the T&Cs.
"3.When you make an offer to lend you may be assigned all or part of a loan which is longer than the market term you have lent through and you appoint
the Company as your agent to enter into any transfer or assignment agreement on your behalf in order to assign the benefit of all or transfer all or part of the loan at the end of the period you have offered to lend for, however, the ability of the Company to do this will be subject to there being funds available in the RateSetter markets to replace your Loan Contract. If there are insufficient funds available in the RateSetter markets then your money will continue to be lent and will be returned to you as the borrower repays their Loan."
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pikestaff
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Post by pikestaff on Jan 19, 2015 15:52:48 GMT
Beat me to it. Don't count on the liquidity in a crisis.
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Post by accumul8 on Jan 20, 2015 10:32:33 GMT
OK - many thanks for the relevant legal clause, Jlend - that now confirms my suspicions. A few more questions if possible please. 1. Is it possible to find out the actual length of the individual loans that my monthly money has been lent out to? ie, what is the worst case scenario in terms of getting my money out. 2. If the loans are not rolled over then do I continue to receive the same interest rate that I originally lent the money at or will it reset to the new monthly rate if there is one? 3. Have we established who actually sets the monthly rate? Is it ratesetter or do the short term borrowers actually bid the rates at which they are prepared to roll over their loans each month? Many thanks.
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spiral
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Post by spiral on Jan 20, 2015 11:19:32 GMT
OK - many thanks for the relevant legal clause, Jlend - that now confirms my suspicions. A few more questions if possible please. 1. Is it possible to find out the actual length of the individual loans that my monthly money has been lent out to? ie, what is the worst case scenario in terms of getting my money out. 2. If the loans are not rolled over then do I continue to receive the same interest rate that I originally lent the money at or will it reset to the new monthly rate if there is one? 3. Have we established who actually sets the monthly rate? Is it ratesetter or do the short term borrowers actually bid the rates at which they are prepared to roll over their loans each month? Many thanks. 1.pikestaff pointed out on the 1 yr market out of funds topic (hopefully the link takes you to the right place p2pindependentforum.com/post/34954/ ), its 5 years! 2. It depends on whether you have set a rate or gone with market rate. If you have set a rate it will never be below that. Whether the loans are rolled over or not is irrelevant as the rolled over loans a relent at the new rate. 3. The rate is set by market forces driving supply and demand as with the other markets.
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Post by accumul8 on Jan 20, 2015 15:32:31 GMT
Spiral, thank you for the answers. In answer to 3. you say it is market forces setting the rates. However, since there are no 1 month borrowers who is making up the borrower offers? For example, at the time of writing, there are 19 lender offers at 2.8% totalling £80k, then another 38 at 2.9% totalling £993k etc.On the borrowing side, there are just 5 borrower offers at 2.6% totalling £1,856.06. Who are these borrowers who are 'offering' on the monthly market? If I were to borrow money for 5 years, would I be able to offer a portion of my loan on the monthly market each month at a lower rate of interest than the 5 year fixed rate? Sorry, I am still very confused - are there any borrowers in the forum who have actual experience of using the monthly rate? My gut feeling is that Ratesetter are just divvying up 5 year loans in monthly tranches to make extra profits which is fine until all the monthly lenders actually want their money back in a hurry.
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