gnasher
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Post by gnasher on Oct 20, 2014 20:13:15 GMT
Well this has opened up a bag of worms hasn't it? So there was me in blissful ignorance using RS thinking it was simple and transparent with everything working to 1dp. I suppose I should have looked at a contract document before, but just looked at one in detail now . I picked one which I placed at 6.4.
Under Loan contract details is says : Lender Return 6.4%
Then I view the contract document and it says
Date : Tuesday30 September 2014 Term 60 month(s) Interest Rate 6.22%
Now if the system works to 2dp, as it appears to, then anything between 6.35 and 6.45 would be sort of OK - but I would still expect a simple 6.4.
......... but 6.22% ? ? ? ? ? ? ?
Edit : Picked another at random, from Jan 14, headline rate 5.7%, Contract Rate 6.18% - now I am really confused. Is it some form of lottery?
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wapping35
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Post by wapping35 on Oct 20, 2014 20:53:39 GMT
Well this has opened up a bag of worms hasn't it? So there was me in blissful ignorance using RS thinking it was simple and transparent with everything working to 1dp. I suppose I should have looked at a contract document before, but just looked at one in detail now . I picked one which I placed at 6.4. Under Loan contract details is says : Lender Return 6.4% Then I view the contract document and it says Date : Tuesday30 September 2014 Term 60 month(s) Interest Rate 6.22%
Now if the system works to 2dp, as it appears to, then anything between 6.35 and 6.45 would be sort of OK - but I would still expect a simple 6.4. ......... but 6.22% ? ? ? ? ? ? ?
Edit : Picked another at random, from Jan 14, headline rate 5.7%, Contract Rate 6.18% - now I am really confused. Is it some form of lottery?
I think the above is a separate issue. It is I believe due to compounding v simple interest. If you take 6.22% divide by 12 months you get 0.52% a month. The way RS comes to a compound rate of 6.4% is they assume you reinvest that monthly 0.52%. If you compound 0.52% over 12 months you get exactly 6.4%. You can do it on a calculator by taking 1.0052^12. (that is to the power 12 not times 12) Or you can take my word for it...
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Oct 20, 2014 21:41:30 GMT
Yeah! How come Wappers's 5.90% jumps in front of my 5.90%. I'll sort 'im out, mate! Yeah! Back to back, they faced each other, drew their fruit & pelted each other!
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gnasher
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Post by gnasher on Oct 21, 2014 5:06:57 GMT
Thanks wapping35, that does indeed explain it, and I see it in the FAQ's too, so all is clear! Except ..... In my posting above I referred to another order at 5.7 that had a contract rate of 6.18, i.e. the other way round, i.e. contract rate higher than the Lenders rate ?? . Hmmmm, how about that? I have started another thread "Contract rate anomaly" so as not to divert this one too far. However needless to say I now find things very confusing. The posting from westonkev quoted this "The Market Rates for our products are set each day by looking at existing lender orders in the market. These orders are shown to one decimal place as a Lender return, whereas the order matching process occurs to two decimal places (as reflected in each Lender contract where the ‘Interest Rate’ is shown to 2 decimal places).
But the 2dp interest rate on the contract is a very different thing from the 1dp lender rate as explained by Wapping above. One is simply calculated from the other, so this does not move us forward in understanding how the queueing system works. And see the other thread for even more confusion. I used to think that RS we delightfully simple and transparent! Or am I just going mad.
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pikestaff
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Post by pikestaff on Oct 21, 2014 7:51:10 GMT
It appears that the various contract rates (to at least 2 dp) invariably work out to lender rates where the second dp is zero (after the RS fee, if any, is allowed for).
Further evidence that the extremely worrying explanation we have been given is garbage, IMO.
Edit: My fear is that the system was set up correctly by someone who understood it, and is now being maintained by someone else, who doesn't...
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wapping35
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Post by wapping35 on Oct 21, 2014 8:28:07 GMT
I have just check the contract rate's for my 2 Friday matches at 5.90% which got matched in priority to my 5.90% put in on Wednesday.
One was a MR and one was a YR but both have a contract rate of 5.75% which does compound to 5.90% so no 2 decimal place difference from 5.90% there.
That said I see the principal, but it does not explain why a YR at 5.90% on Friday does not equal a YR at 5.90% on Wednesday and thus FIFO should apply.
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spiral
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Post by spiral on Oct 21, 2014 8:43:28 GMT
How on earth can MR ever be 2 decimal places? This can only ever be the case if YR can be 2 decimal places as MR is calculated as the current rate excluding a small % of outliers so if the market had 25K at 5.9% and 300K at 6%, MR can only come out as either 5.9 or 6.0 depending on the amount calculated as outliers. To end up with 5.95 as MR would require money in the queue at 5.95 and nobody can do that!
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warn
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Post by warn on Oct 21, 2014 9:08:41 GMT
... MR is calculated as the current rate excluding a small % of outliers ... Oh, that's just what the documentation says. It's becoming more and more obvious that in more and more areas the documentation conforms less and less to reality. Sooner or later RS is going to have to employ a technical writer to explain the system properly, or else face the odd raised eyebrow from a Higher Authority.
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Post by bracknellboy on Oct 21, 2014 9:40:32 GMT
....Edit: My fear is that the system was set up correctly by someone who understood it, and is now being maintained by someone else, who doesn't... Come on now, that would never happen in the world of IT would it ? All systems are carefully and thoughtfully documented so that when the inevitable happens and the guru moves on to pastures new or falls under the proverbial there is a seamless transfer knowledge to the organisation. Now where are those pigs when you need them ?
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Oct 21, 2014 10:23:17 GMT
Now where are those pigs when you need them ? Previous engagement. AC big website bash.
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Post by geoffrey on Oct 21, 2014 10:59:59 GMT
I wonder if the Market Rate is calculated not by discarding the bottom few percent of orders, but as some kind of (weighted) average of the offers in the current market rate and all offers below. This would presumably give a calculation to two decimal places. If all "standard" orders at, say, 6.0% match an actual market rate of 5.95% or above, but Your Rate orders will not match anything below 6.00% exactly, it might explain the anomaly. The solution is to allow a Your Rate of 6.0% to match anything from 5.95% and above in the same way that standard orders (and auto-lending orders at MR) appear to do.
PS I understand that FCA rules require P2Ps to operate to two decimal place accuracy (possibly more?), but that it is up to each P2P to set the granularity of orders.
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Post by GSV3MIaC on Oct 21, 2014 12:03:15 GMT
Make more sense for MR to be weighted average of the last X matches achieved, which would IMO actually be better than allowing it to be wiggled by rogue lenders offering a few squid at a particular time. However the documentation ought match the reality. I, like everyone else, assumed MR was a single decimal digit granularity, just like the rates I can select manually.
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oldgrumpy
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Post by oldgrumpy on Oct 21, 2014 12:08:09 GMT
Mmmmm!! I don't want "market rate" decisions by RS at 5.95% to be dumped into a pot where I am only allowed to specify 6.0%. That would mean RS could manipulate each morning's bulk orders to the front of an existing queue as and when they please (if they so choose). If RS can put the money in at 5.95% (concealed) I want it to be visible to me; I want the facility to put my money in at 5.94% if I choose to.
ed. cross posted with GSV3MIaC
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Post by yorkshireman on Oct 21, 2014 13:14:11 GMT
Mmmmm!! I don't want "market rate" decisions by RS at 5.95% to be dumped into a pot where I am only allowed to specify 6.0%. That would mean RS could manipulate each morning's bulk orders to the front of an existing queue as and when they please (if they so choose). If RS can put the money in at 5.95% (concealed) I want it to be visible to me; I want the facility to put my money in at 5.94% if I choose to. ed. cross posted with GSV3MIaC Wot, manipulation at RS??
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Post by westonkevRS on Oct 21, 2014 13:24:01 GMT
Here's the official explanation: " The Market Rates for our products are set each day by looking at existing lender orders in the market. These orders are shown to one decimal place as a Lender return, whereas the order matching process occurs to two decimal places (as reflected in each Lender contract where the ‘Interest Rate’ is shown to 2 decimal places). This means that there are 10 different base rates that can match to the same lender return. Lender base rates are set by many different processes (lender orders, reinvestments, sellouts, forced fills). So it is possible that the same Market Rate expressed as a lender return is in fact at a different base rate. Over the last few days the Market Rate base rate has been at 5.75 and 5.84, both of which match to a lender return of 5.9% and which explains the recent activity. This can occur if you have chosen to set “Your Rate” and it is below or at that day’s Market Rate and the order has not been fully matched on that day and there has been a subsequent change in the Market Rate base rate such that the base rate is lower at the same lender return. This is an unusual event" Should the 5.9% I've highlighted in red should read 5. 8%? elljay, It's correct, 5.9%. The lender return presumes reinvestment, see www.ratesetter.com/lend/faq " Our displayed rates of return assume that a Lender is reinvesting their repayments in the same market, at the same rate. If your calculated rate of return is less, this may be that you have not reinvested your repayments, or have reinvested them at a lower rate than the original rate you agreed. "
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